December 15, 2016
Andrew Alin, Chris Gavin and Scott Cammarn comment in IFLR about key trends that could impact the global business and financial community in 2017.
Andrew Alin on how the election of Donald Trump may affect M&A deals:
According to Andrew Alin, this uncertainty might initially be expected to temper the pace of M&A as possible buyers take a wait-and-see approach. Alin's sense, when asked in November 2016, was that the impact of president-elect Trump on M&A is hard to predict – and this goes for his stance on antitrust too.
GOP administrations in the past have been viewed as more favourable to the issues around larger transactions. "But president-elect Trump has taken a more populist approach," explains Alin. Policy is important, of course, and it shapes a lot of deals. But as he points out, there are also a lot of cases where policy issues – such as antitrust – will not be as relevant to the transaction. "My sense is that 2017 is going to be a good year," Alin concludes.
Chris Gavin on regulation of shadow banks:
"My own view is that there is the likelihood of a regulatory rollback as opposed to any expansion." Instead, Gavin sees talk of some modest capital relief for banks and some regulatory roll-back. That itself would have an impact on non-regulated financial institutions. "As an indirect effect, that could shrink the shadow bank sector by allowing banks to return to some areas of market activity."
Scott Cammarn on a possible repeal of the Volcker Rule:
"We hear certain anxieties from private funds which would be competing with banks," says Scott Cammarn. That's a medium or long-run consideration however. As Cammarn points out, banks have significantly downscaled their trading operations, partly in response to higher capital requirements but also partly as a result of Volcker. This means it would take time for the traditional firms to return to certain activities. 2017 would, however, still see at least one instant win for banks if the rule was scrapped.
"The big lift on Volcker is getting rid of compliance, the costs of which are enormous. That's a big save right there," stresses Cammarn. He also points out that the head of the Office of the Comptroller of the Currency Thomas Curry's term expires in April – president-elect Trump will have the power to replace him, and the GOP House will also likely be pressing to replace Richard Cordray at the Consumer Finance Protection Bureau (CFPB). Plus, high on the GOP wish list is the elimination of the Financial Stability Oversight Council and its ability to bring entities under federal supervision.