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Banks (Finance)

US Banks Remain Relatively Unaffected by European Debt Crisis, Despite Rising Anxiety

Strategic Insights

— 1 min read

Despite concerns among US investors that the European debt crisis could impact major US banks, credit spreads for most major US banks tightened this week, averaging a 2-4% decrease. Analysts are worried that the risk aversion trends seen in Europe may eventually trickle over to the US side of the Atlantic, but for now, major US banks have not been significantly affected. The current concerns among US banks are domestic, driven by the Federal Reserve's decision to buy $600 billion in Treasury securities, which caused a price drop and a flurry of activity amongst investors.

Key Takeaways:

  • Credit spreads for most major US banks tightened this week by an average of 2-4%.
  • Analysts are concerned that risk aversion trends in Europe may eventually impact US banks.
  • The Federal Reserve's decision to buy $600 billion in Treasury securities caused a price drop and a flurry of activity amongst investors.
  • Deposits amongst US banks rose recently as consumers prefer savings accounts with quicker access to their money.
  • Citigroup Inc. posted a third consecutive positive quarterly result with earnings of $2.2 billion in the third quarter 2010.
  • JPMorgan Chase & Co. also reported a positive quarter with a 23% jump in profit to $4.4 billion.
  • US banks are facing domestic concerns rather than being significantly affected by the European debt crisis.
  • Consumers are shifting their preference towards safer investments, such as savings accounts.

Statistics:

  • Credit spreads for major US banks tightened by 2-4% on average (no specific date mentioned).
  • The Federal Reserve pledged to buy $600 billion in Treasury securities (no specific date mentioned).
  • Citigroup Inc. reported earnings of $2.2 billion in the third quarter 2010.
  • JPMorgan Chase & Co. reported a 23% jump in profit, with earnings of $4.4 billion in the third quarter 2010.
  • Deposits amongst US banks rose recently, with no specific figure mentioned.

Sources:

  • Wall Street Equity Research
  • www.wallstreetequityresearch.com
  • Marketwire (Dec 01, 2010)
  • Sources cited in the original text, exactly as mentioned.

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