Truist Exits $5.5B Auto Lending; Fintech CEO Lyons Targets More Divestitures

The U.S. Federal Reserve plans to raise asset thresholds for stricter bank oversight, according to sources. Current thresholds are $100B, $250B, and $700B. The Fed may reindex these, potentially benefiting banks like U.S. Bancorp, Capital One, and PNC. Changes could spur consolidation and reduce regulatory burdens.

The US Federal Reserve plans to raise asset thresholds for stricter oversight of big banks, according to sources. Current thresholds are $100B, $250B, and $700B. The Fed may reindex these, potentially benefiting banks like U.S. Bancorp, Capital One, and PNC Financial. Changes could spur consolidation among mid-size lenders and increase competition, but critics argue it may reduce consumer benefits and increase systemic risks.

Truist Financial (NYSE:TFC) is selling $5.5B in auto loans to focus on more profitable businesses like wealth and investment banking, aiming to improve earnings quality and reduce consumer-credit risk. The sale may boost shareholder returns but could pressure near-term revenue if capital is not redeployed effectively.

Apollo Global Management (APO) is in advanced talks to acquire DePuy Synthes from Johnson & Johnson and plans to buy $5.5 billion in auto loans from Truist Financial. These deals aim to broaden Apollo's healthcare and consumer credit activities. Apollo has a market value of about $74.4 billion and focuses on credit, private equity, and real estate investments.

Major U.S. banks, including JPMorgan, Bank of America, and others, raised their prime lending rate to 7% after the Federal Reserve's quarter-point rate hike. The move increases borrowing costs for consumers and businesses. Bank stocks fell, with BofA down 2.7%, Citi 2.4%, and JPMorgan 1%. Rate hikes may boost bank earnings but could also slow economic activity and impact credit quality.

Truist Financial (TFC) sold a $5.5B auto loan portfolio, generating $950M in capital. CEO Mike Lyons is reviewing businesses to align with core banking. The sale may reduce net interest income but is expected to improve earnings. Truist reaffirmed its 16-18% ROTCE target and $5B share repurchase plan.