JPMorgan and Citigroup offer shareholders higher returns under their current structures than if they were split into smaller pieces, according to Jeff Harte, an analyst at Sandler O’Neill & Partners LP.
“Their ROE would be higher and their returns better as a consolidated entity than if we broke them up into their individual pieces,” Harte said Monday in an interview on Bloomberg Television, referring to the companies’ return on equity. “The key question bank investors have to ask is - at what point in time does the aggregate ROE fall below what the ROE would be across the different businesses if they were broken up? I don’t think we’re there yet.”
Bloomberg News reports that Harte said many U.S. banks will face volatility in the near term, though they’ll perform well as long as the economy continues to grow. Most of the Federal Reserve’s capital requirements for the biggest banks have already been taken into account by analysts and investors, Harte said.
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