U.S. Bank Deregulation Could Release $2.6 Trillion

Large U.S. banks may gain access to nearly $2.6 trillion in capital under upcoming deregulation, according to a new Jefferies report. The capital unlock stems from an expected 15% reduction in CET1 requirements, equal to roughly 16% of all U.S. banking assets—about half the size of JPMorgan’s (JPM) balance sheet.

Early Signs Already Emerging

Jefferies noted that the impact is visible already:

U.S. banks increased risk-weighted assets by 10% annualized in Q3 2025.
Major banks such as JPMorgan, Goldman Sachs, and Wells Fargo have begun boosting lending, M&A activity, and profitability targets.

Most of the capital release is expected in 2026, as banks lower management buffers and redeploy capital into higher-return areas.

G-SIBs Expected to Benefit the Most

The deregulation is set to heavily benefit global systemically important banks (G-SIBs).

Jefferies estimates:

6% uplift in ROTCE for U.S. G-SIBs
3% uplift for U.K. banks
EU and Swiss banks will see limited upside due to comparatively higher capital requirements.

Bank-Specific Actions Highlight Momentum

Jefferies highlights several examples of capital redeployment:

JPMorgan (JPM):
- $1.5T lending target in security and resilience
- Includes $500B in new loans and $10B in equity investments
Goldman Sachs (GS):
- Deploying excess capital into acquisitions
- Strengthening client-facing businesses
Wells Fargo (WFC) and Bank of America (BAC):
- Increasing profitability targets
- Reducing management buffers to enable capital efficiency

Global Impact and Regional Divergence

The U.K. will likely follow the U.S. with a slower, smaller deregulation cycle.
The EU and Switzerland face profitability constraints and less upside due to stricter capital demands.

Market Reaction

The KBW Bank Index (BKX) rose 1.6% on Friday.

Bank of America (BAC) gained 1.0%
Citi (C) rose 0.8%
Wells Fargo (WFC) added 0.8%
JPMorgan (JPM) dipped 0.4%
Goldman Sachs (GS) traded flat