Repo Financing To Hit Buy-Side More Than The Sell-Side: CITI

Repo financing will hit buy-side more than the sell-side as banks start switching focus from ROE to ROA, reports Citi Research. Keith Horowitz and the team at Citi Research report that as banks move toward a leverage-based capital approach, banks will switch focus from maximizing ROE to ROA. Opportunities to enhance leverage ratios The eight biggest U.S. banks will need to hold twice as much equity capital as required globally under a new rule launched by U.S. regulators in July, intended to protect taxpayers from any future costly bailouts. The rule would impose a so-called leverage ratio which requires the…