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New proposals would raise the capital requirements for the largest and most important banks by 9%, down from 19%
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M.Stanley upbeat on US banks after Fed move
LONDON - Morgan Stanley has recommended investors to buy U.S. banks after the Federal Reserve raised its discount rates, saying the move indicates rising confidence in the economic recovery.
“If this group trades down because investors assume that rising rates for the bank group is a negative, we strongly recommend investors buy,” Morgan Stanley analysts said in a note.
“The discount window rate hike signals rising confidence in the recovery,” they said, adding that they were overweight large cap U.S. banks “as we believe less bad is good for the stocks.”
The Fed cast its decision to raise the discount rate to 0.75 percent from 0.5 percent as a response to improved financial market conditions that warrant less of a helping hand from the U.S. central bank.
Morgan Stanley said higher rates would lift non-interest margin “as checking account balances are non-interest bearing and most banks have positioned themselves to be asset sensitive, which drives up NIM as rates rise, (and) it suggests that credit is getting better.”
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