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BofA, US Bancorp flag risks of Trump era in regulatory filings
[LONDON] Overhauling lists of theoretical risks in annual reports, two of the largest US banks braced investors for the possibility that political shifts in Washington and abroad might damage their businesses or the economy.
"Changes to existing US laws and regulatory policies including those related to financial regulation, taxation, international trade, fiscal policy and health care may adversely impact us," Bank of America Corp, the nation's second-largest bank, wrote in a 10-K filing on Thursday.
"The recent change in national political leadership has introduced some uncertainty into the direction and timing of any future regulation," US Bancorp, the nation's biggest regional lender, wrote in its own filing.
The company also said an expansion of nationalism, such as the UK's decision to exit the European Union, "could slow the recovery of the domestic economy or negatively impact the company's borrowers".
Leaders of the world's biggest banks have been weighing whether and how to warn investors about uncertainties as President Donald Trump's new administration seeks to boost economic growth by reshaping regulation and government spending, while curtailing immigration.
Many companies are now including new language in annual reports, which typically include exhaustive lists of theoretical risks ranging from new rules to health pandemics and terrorist attacks.
Bank stocks have been on a bull run in recent months. Investors are betting lenders will generate larger profits and pay out more to shareholders if Trump sidelines the industry's sharpest critics, dismantles post-crisis rules and pursues policies that spur inflation and lift long-term interest rates.
Bank of America and US Bancorp's annual filings don't mention Mr Trump's name. And while they tick off risks linked to overhauling government policy, neither predict it will necessarily hurt the business environment. Even if compliance and risk-management operations need to be restructured because of rule changes, US Bancorp noted, costs may ultimately fall.
Separately, US Bancorp chief executive officer Richard Davis has informed vetting officials that he isn't interested in joining the Federal Reserve Board as Mr Trump considers nominees for three openings, a spokesman for the Minneapolis-based bank said on Thursday.