Regional Banks Shrink Balance Sheets as Stricter Rules Loom (1)

US regional banks are shrinking their balance sheets to strengthen capital and improve liquidity as heightened interest rates and an anticipated tightening of regulations loom over the sector.

U.S. Bancorp said it increased its CET1 capital ratio in the second quarter by 60 basis points from the previous three months while also making targeted asset sales and securitizing auto loans in an effort to cut risk on its balance sheet. Citizens Financial Group Inc. earmarked around $14 billion in loans that it will allow to run off its balance sheet as part of “intensified balance sheet optimization efforts.”

A U.S. Bancorp office in San Francisco, on April 7, 2023.

Photographer: David Paul Morris/Bloomberg

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