Global professional services firm Alvarez & Marsal (A&M) forecasts that recent US banking deregulation could unlock a 15% CET1 capital release, boosting asset capacity by $2.6 trillion — roughly half the balance sheet of JPMorgan Chase.
The report suggests this shift will expand lending and capital markets activity, strengthening the competitiveness of US banks compared to global peers.
A&M also notes a growing divide in global regulation, as the US and UK pursue capital relief, while the EU and Switzerland tighten oversight, reshaping the international financial landscape.
Regional findings include:
- United States: CET1 requirements reduced by 168bps, unlocking $2.6 trillion of additional asset capacity and driving a 5.8% uplift in ROTCE
- United Kingdom: UK regulators are expected to follow with a CET1 release of 102bps, equivalent to around $0.5 trillion of additional capacity or 9% of total UK bank assets. UK bank profitability is forecast to rise by 3.2%
- European Union: CRR3 implementation increases minimum CET1 requirements by 187bps. Net effect will be neutral-to-negative, with ROTCE declining by 1%
- Switzerland: Post-Credit Suisse reforms Swiss authorities are materially tightening rules, raising UBS’s minimum CET1 by 769bps to 19% and cutting expected ROTCE by 8.3%
Fernando de la Mora, Co-Head of Alvarez & Marsal’s EMEA Financial Services practice, said: “US deregulation is reshaping the playing field for global banks. The release of $2.6 trillion in asset capacity will represent a direct boost to US economic growth and underlines the scale of policy divergence. The UK appears set to follow, but the EU and Switzerland are taking a very different path. These competing approaches will drive valuation gaps, strategic repositioning and regulatory arbitrage for years to come.”
