Bank Investing News

Billions of dollars of debt at extremely low interest are being made by US banks who are utilising rising earnings and investor demand

Unlike Europe, whose struggling banks and plunging market confidence have negatively affected the economy, fundraising has been booming in the US, marking a surprising return to form for a sector which has been plagued by problems and criticisms during the economic downturn

Last week, more than $7 billion were issued in debt by US banks, a staggering figure which comes just 2 years after government-funded bailouts, which drew much negative attention to the banking industry.

With the margins soaring on bank loans issued to clients, profits follow suit, as decreased funding costs stimulate the system.

More informal approaches taken by fund managers are the reason, says Wall Street, since the relaxed approach brings positive attention to the sector that has been ignored throughout the recession, triggering a brand new interest from investors, who are looking for better options now that US Treasury returns are posting lower and lower.

Furthermore, near-zero interest expectations have bolstered the popularity of bonds that need a low-interest surrounding to strive in.

Increased earnings have also helped pave the way for such generous loan-giving, and the rise in fundraising is now ensuring that banks can replace old bonds with new cheaper ones.

Europe’s banks are not posting the same impressive figures, however their banks are recuperating as well, albeit at a lower pace.

Chris Termeer