Show Notes
The global banking sector is navigating a crosscurrent of geopolitical uncertainty, a historic regulatory reset, and powerful structural forces — from AI adoption to the rise of private credit and stablecoins. In this episode, Gerard Cassidy and Anke Reingen, Co-Heads of Global Financials Research at RBC Capital Markets, discuss where U.S. and European banks stand today and what investors should be watching next. Banks’ fundamentals are strong, but the sector is vulnerable to sustained high oil prices. Smaller regional banks are outperforming the market. AI deployment, consolidation, and a resilient credit outlook are growth drivers. U.S. regulators are supportive; European regulation is softening to match. U.S. commercial loan growth is accelerating, supported by tax changes. Investment banks are posting growth and could benefit from a revival in IPOs.
Chapter markers: Introductions [00:07]
Host Joe Coletti introduces the podcast and guests: Gerard Cassidy and Anke Reingen, Co-Heads of Global Financials Research. They discuss the strong underlying fundamentals of the banking industry, despite continuing risk from prolonged war in the Middle East. Growth Drivers [06:58]
AI deployment, the growth of stablecoins, and continuing consolidation are among the main structural themes driving growth. Loans to NFDIs are a potential concern but banks are less vulnerable than the private credit sector. Regulation [13:30]
U.S. regulation is pro-bank, and the easing of capital requirements will feed balance sheet growth, dividend payments, acquisitions, and stock buybacks. Proposed regulation in Europe may soften to ensure its sector is not disadvantaged. Lending Volume [18:15]
Commercial loans, bolstered by tax changes, are the biggest element of U.S. loan volume growth. Incentives in Europe also boosted corporate loans, but confidence has since declined. Investment Banks [22:48]
Deregulation is strengthening the deal pipeline for investment banks. A rush to M&A before the end date of the U.S. administration could benefit them further.
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