Financial Losers, Bank of America

Regional banks were among the few bright spots. SPDR KBW Regional Banking(KRE_), an exchange traded fund that tracks regional bank stocks, was higher by 0.28%, with all of its top three holdings, East West Bancorp.(EWBC_), Cathay General Bancorp(CATY_) and Signature Bank(SBNY_) all showing gains.

The largest U.S. bank stocks were lower on Monday following lower analyst estimates and PNC Financial(PNC_)'s acquisition of Royal Bank of Canada(RY_)'s U.S. assets for less than tangible book value.

The Financial Select Sector SPDR(XLF_), a widely-followed exchange traded fund that tracks financial stocks, was down .07% to close at $14.88 on lighter-than-average volumes.

The fact that PNC was willing to pay more than BB&T, but still less than tangible book value, was taken as a largely negative sign for U.S. bank stocks, analysts said.

PNC shares fell by 1.96% to $56.66 on more than triple their average volumes as many analysts criticized the deal. They argued RBC's branches, located throughout the southeastern U.S., made little sense from a strategic point of view for PNC, as it will face competition from powerhouses like Bank of America(BAC_) and Wells Fargo(WFC_), not to mention BB&T Corp.(BBT_), which was seen as being in the best position to bid for the RBC assets because its branches overlap significantly with those of the Canadian bank.


Bank of America, JPMorgan Chase(JPM_) and Citigroup(C_) saw shares fall by 0.75%, 0.78% and 0.37% respectively following reduced analyst estimates related to concerns these banks would be forced by international regulators to hold higher capital cushions. Goldman Sachs(GS_) and Morgan Stanley(MS_) also saw their estimates reduced, and shares of those companies fell by 1.52% and 1.93% respectively.

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