Large Cap Banks: Regulatory Spotlight: Double Fee; Change in FDIC Assessment Base to Impact Citi & BofA

Large Cap Banks: Regulatory Spotlight: Double Fee? Change in FDIC Assessment Base to Impact Citi & BofA Most.  Sen. Tester’s amendment, which is included in the Senate version of the financial reform bill, would reduce industry’s earnings further due to sharply higher FDIC insurance premiums, as it changes the assessment base to liabilities from assessed deposits. This appears to be a second fee on wholesale liabilities, as the Financial Crisis Responsibility Fee is also proposed to be levied on a similar basis. Not surprisingly, the proposal would hurt large wholesale banks with large trading operations much more and especially Citi because of its large amount of overseas deposits and significant international operations. By our estimates, the change would reduce normalized (2012) EPS by 4%, on average, with a fairly wide range – highest at Citigroup (14%) and Bank of America (7%) and 2-5% at all others