Why Bank of America’s New Business Model?
It seems that the second and third quarters of significant improvement of the Bank of America is a significant period of time, but we still hear the news of stock in major banks fell by more than 20%. The third, the book value of the five transactions since the fourth quarter began. Do you know why?
While some commentators have criticized the McKinsey Quarterly “double-dip recession, or the fear of the debt crisis of the European countries, has been trying to draw attention to three additional factors. Thirdly, the new banking regulations to refute the U.S. financial crisis, Dodd – Frank bill, began to undermine the problems of the newspaper business, including new capital requirements for banks under the Basel international banking regulations and deleveraging continue to customers. It is estimated that if the banks continue to follow the current business model, their average ROE (return on equity) increased by 11 percent to 7 percent, is expected to decline in 2015. In addition, investors are willing to see the bank’s management team, and considered that the proposed large-scale project to fill this gap, which is currently circumstances, but the next step how to do? Let’s take a look.
These three factors, the requirements of the Basel III is the most important, because without having to prove his actions, they can reduce some of the banks’ net capital gains rate of 5%. So, it was estimated that the banking system in the United States will need nearly $ 500 billion in retained earnings or stock may be relatively new, to meet the new standards. The second threat is the slow-moving, like the payment plug-in fee for a change, but also need the mobile switching center of a large number of over-the counter transactions (OTC) business. This may lead to more expensive and complex day-to-day operations.
Then the following threats involving the behavior of the consumer debt, according to the analysis, the main reason of the excessive borrowing of the recession, businesses often have to spend the next eight years to adjust its balance sheet. Therefore, there is little the level of the company to repay the loan, some people may never return to the prospect. Therefore, banks should limit their neglect of capital, because all the money, especially from more than a decade. In fact, the use of contact venture capital adjustments will prove more useful in this case.
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