A lender might try to absorb that by reshuffling its investments, reducing debt elsewhere, or even making riskier loans to offset lost profit. Assuming a 5% coupon, it could cost $1 billion a year, equivalent after tax to more than 10% of the bank’s bottom line. Fitch Ratings reckons PNC, for example, might need to raise $20 billion. Yet because junior mega-banks fund a greater share of their business from cheap deposits than their bigger brethren, raising long-term debt would cause financial disruption too. PNC boss Bill Demchak noted that his office is on Fifth Avenue, but the one in Pittsburgh, not Manhattan. They are also much simpler than their bigger rivals, lacking international networks and complex trading businesses. The super-regionals, however, already draft so-called living wills outlining how they could be safely dismantled in a crisis. Register now for FREE unlimited access to Register One option is to make them issue more long-term debt so that if a lender fails, there are investors who can be forced to convert their holdings into equity. The Federal Reserve and the Office of the Comptroller of the Currency are considering tougher rules for so-called super-regional banks to make a potential failure easier to manage.

Mega-bank is more than just a political slur, though. Weighed on systemic significance, U.S Bancorp is around one-eighth as risky as JPMorgan, according to a U.S. They’re also simpler than their trading-heavy competitors.

While all three have grown briskly, their $1.7 trillion in combined assets are only half those of Bank of America (BAC.N). Bancorp (USB.N) joined jumbo-size counterparts on Capitol Hill for a grilling last week, their first appearance as what Congress terms mega-banks.

The bosses of PNC Financial Services (PNC.N), Truist Financial (TFC.N) and U.S. The perception could lead to annoyance for them and less effective competition. banks operating in the shadows of JPMorgan (JPM.N) and Wells Fargo (WFC.N) are increasingly being regarded by authorities as more like their larger rivals. NEW YORK, Sept 26 (Reuters Breakingviews) - Elevation leads to aggravation.

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