Basel Standards Seen As Positive

The Basel Committee released the well telegraphed capital ratios today, which were inline with expectations, according to Deutsche Bank. Given the increased clarity and current capital ratios at the US banks and brokers, it is viewed as an incremental positive. DB continues to like the risk/reward with the brokers and well capitalized banks. Deutsche Bank maintains it's Buy ratings on Goldman Sachs GS and Morgan Stanley MS, of the brokers as well as a Buy on Citi C, J.P. Morgan JPM, PNC Bank PNC, SunTrust Banks STI, and Wells Fargo WFC, of the banks. DB says the brokers remain well positioned by having common equity and tier 1 ratios above the standards. This puts the firms closer to redeploying excess capital once they get the green light from US regulators, which is expected by 2011. Industry risks to the upside include strong volumes, rising rates, a stronger economy, and a pickup in capital markets activity, while downside risks include weak volumes, extended low rates, increased regulation, a weak economy, deteriorating credit and sluggish capital markets activity. GS closed Friday at $150.39 MS closed Friday at $27.19 C closed Friday at $3.91 JPM closed Friday at $39.76 STI closed Friday at $24.34 PNC closed Friday at $54.76 WFC closed Friday at $25.75