Loosening capital requirements will lead to increased bank M&A, says RBC’s Gerard Cassidy

Bank Stress Test & Regulatory Environment - Banks are expected to pass stress tests with flying colors, potentially leading to a shrink in stress capital buffer for some, like NT Bank [2] - The stress test primarily focuses on credit quality and liquidity, but does not adequately address interest rate shock scenarios [9][10] - Deregulation is expected to impact various industries, including banking and energy [13] Investment Banking & Capital Markets - Jefferies indicates resilience in investment banking and capital markets, expressing optimism for the second half of the year [5] - April was a challenging month for investment banking due to tariff news, but performance improved in subsequent months [6] - Investment banking revenues are projected to be down high single digits, while trading revenues driven by equities are expected to be up mid to high single digits; these figures may improve due to strong June performance [7] Mergers & Acquisitions (M&A) - There appears to be a build-up of potential M&A activity due to uncertainty in March and April [12] - The current administration is perceived as supportive of consolidation, including M&A activity across various industries [12][13] Commercial Real Estate (CRE) - The stress test this year has lower credit losses in commercial real estate, which would be another benefit for banks [4] - NT Bank has a higher level of commercial real estate loans than its peers, which previously led to a higher stress capital buffer, but this has been reduced [3]