Banking and Asset Managers Forge New Partnerships Amid Regulatory Changes
Big banks and alternative asset managers are collaborating to navigate regulatory changes, enhancing support for middle-market clients, and addressing increased capital requirements.
Troy D. Hanson
September 29, 2023
Big banks and alternative asset managers are teaming up to navigate the impending wave of regulations. Wells Fargo and Centerbridge Partners recently announced their partnership aimed at providing direct lending to middle-market companies. This collaboration, which includes the launch of Overland Advisors by Centerbridge, will leverage Wells Fargo's client base while granting the bank an equity stake.
Enhancing Support for Middle-Market Clients
Wells Fargo CEO, Charlie Scharf, expressed that this deal is a significant step forward in bolstering their commitment to middle-market clients. The partnership will enable them to provide even stronger support to these businesses during a crucial time.
Addressing Regulatory Changes
This announcement comes at a time when banks are preparing for increased capital requirements as proposed regulations are introduced. With the need to hold more capital against their balance sheet assets, banks are likely to limit lending and explore off-balance sheet avenues to maintain profitability and retain clientele.
A Trend in Collaboration
Chris Kotowski, an analyst at Oppenheimer, anticipates more collaborations between banks and alternative asset managers as the industry adapts to regulatory changes. The rising capital requirements and the need for reasonable returns on equity necessitate these strategic partnerships.
Bank CEOs Concerned About Regulations
CEOs of major banks have expressed concerns regarding the impact of new regulations. JPMorgan Chase CEO, Jamie Dimon, highlighted how hedge funds and private-equity funds stand to benefit from banks scaling back due to the new regulations.