Caution Needed on Push Into Repo Lending


Regional lenders like Wells Fargo, Nordea and the Sumitomo Mitsui Financial Group have been bulking up in repo, a form of short-term collateralized lending that principally helps nonbank financial groups fund themselves and their clients. It’s not a wholly positive trend.

New regulations have forced big investment banks to pull back from the business. Repo lending is low-margin and balance-sheet-intensive, making it one of the first areas to be cut because of tougher leverage and liquidity regulation. Morgan Stanley data shows that as of June 30, JPMorgan Chase had slashed repo assets by a quarter since the middle of 2011, while Credit Suisse and UBS were down two-thirds…

Caution Needed on Push Into Repo Lending

Categories : Uncategorized

Leave a Reply

You must be logged in to post a comment.