Magazine article American Banker

Regions, Capital One Cutting Back in Auto

Magazine article American Banker

Regions, Capital One Cutting Back in Auto

Article excerpt

Byline: Paul Davis

Plans by Regions Financial Corp. and Capital One Financial Corp. to pare back exposure to the auto sector signal increased pessimism about the health of the consumer as well as the profitability of the sector, analysts said.

"It's another sign of the times," said Christopher Marinac, an analyst at FIG Partners LLC. He said the Federal Reserve Board's decision last week to cut the federal funds rate by 50 basis points will force Regions and Capital One to lower interest rates on such loans.

Kevin Fitzsimmons at Sandler O'Neill & Partners LP said "banks are being more careful and judicious" about how they use capital to build their balance sheets.

Capital One, of McLean, Va., confirmed Friday that at the end of the month it plans to stop making inventory loans to dealerships in its New York and New Jersey markets. The $151 billion-asset Capital One will continue to lend to dealers in Texas and Louisiana; it sent notices in August to less than 20 dealers in the Northeast notifying them of the move, Steven Thorpe, a spokesman, said Friday. …

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