We currently estimate that the Volcker Rule could reduce combined pretax earnings for the eight largest U.S. banks by up to $10 billion annually, up from our initial $4 billion estimate two years ago. But the impact could also be smaller if final rules are less strict. In our view, less strict rules would have a limited impact on banks’ earnings and business positions, so it’s unlikely that we would take any rating actions as a result.
. . . we think Goldman Sachs and Morgan Stanley could be affected the most because they derive a larger percentage of their revenues from trading than the other banks.
Stricter rules could lead us to take negative rating actions on certain banks, depending on how they adapt their business models to the new regulations and the degree to which we estimate the regulations might hurt earnings and business positions.
Read the full report ($): For U.S. Bank Ratings, The Volcker Rule’s Impact Depends On The Final Details