U.S. Bancorp sees warrants settled soon
NEW YORK, July 1 (Reuters) – U.S. Bancorp Chief Executive Richard Davis said on Wednesday he expects the bank and others that recently exited a federal bailout program to learn this quarter how the government will dispose of warrants to buy bank stock.
In an interview, Davis also said the economy will remain in recession for another year and his bank expects to build reserves for loan losses at least for the rest of 2009.
Davis also said that, as regulatory oversight increases and banks reduce risk-taking, the industry will be less profitable than it was before the credit crisis. He said investors may nevertheless start valuing banks more highly because there will no longer be a risk of an “Armageddon fallout.”
U.S. Bancorp is the eighth-largest U.S. bank by assets and has weathered the credit crisis better than most large rivals.
The Minneapolis-based lender was among 19 large U.S. banks that regulators subjected to “stress tests” of their ability to handle a deep recession and was among nine found not to need more capital. Last month, it repaid $6.6 billion of funds taken from the federal Troubled Asset Relief Program.