00:00Let's turn now to the Big Take story. We love the Big Take stories that come out every day from Bloomberg News.
00:04Deeply sourced. Just great, fascinating stories. Really well done.
00:09This one goes to Wall Street's balance of power is shifting.
00:13Big banks are roaring back as regulation eases, lending surges, and private credit giants lose some of their luster there.
00:20Bloomberg's Catherine Chiglinski helps lead our investing coverage.
00:23She is a pride of the William & Mary University, but she leads our coverage on all that stuff and investing in banks.
00:29She joins us for more. Talk to us about kind of the big banks.
00:32Like when I graduated from business school, went to the Chase Manhattan Bank, we did leverage lending.
00:37We made a fortune. And to see private private credit take some of that business away really surprised me over the last 15 years or so.
00:45How's that balance of power these days? Well, it was huge.
00:47I mean, it was a huge shift to see all these private credit, private equity firms sort of really taking all this market share away from the banks
00:54as the banks, you know, post-financial crisis. We're sort of limited by regulations and also we're arguably trying to be a lot, you know, safer overall.
01:03But now we're actually seeing it change a little bit. And I'm not trying to say, you know, banks are going hog wild on everything.
01:09But like they've been involved in a lot of the leveraged loan deals this year.
01:13We've seen them in some of the major acquisition financing. And it's been a good year for the banks.
01:19I mean, regulations have pulled back. JP Morgan's on track to have its highest annual profit.
01:25So it's actually been a pretty good time now to be a bank. Yeah, the balance has really shifted.
01:29It's revenge of the banks is how Mike Mayo, well-known analyst, bank analyst over at Wells Fargo, put it.
01:36These non-banks, though, do they in return perform less well, have less of the pie?
01:42How does ultimately it distribute itself? Because also just the sheer scale of non-usual assets or alternative assets
01:51has just grown exponentially to like 16 trillion.
01:53Grown exponentially. So obviously I still think those firms will be fine overall.
01:58But you're really seeing the stock price talk a little bit.
02:01So like the bank stock prices are up quite a bit.
02:04I mean, Citigroup, we had their price to book ratio climb above 1% for the first time in a very long time.
02:09Like I think you're starting to see them sort of get their mojo back a little bit
02:13and really find the groove and the businesses that they're, you know, digging deeper into investment banking, trading, et cetera.
02:21But I also think you're seeing, you know, I think you'll still see these private credit firms, you know,
02:26work really hard and like, you know, find different deals.
02:31But I do think it's more challenging.
02:33I mean, we've had that whole, you know, I feel like this year it was the credit cockroach debate.
02:38That really reigned for a long time.
02:40And while some of the banks were involved in some of those cockroaches, like first brands,
02:44you know, I think there is this growing sense that, like, maybe we should be a little more,
02:49we should scrutinize a little bit more of these deals.
02:51And obviously the alternative asset managers got so big in the private credit space for so long
02:56that I think there's a little bit more of a scrutinizing eye on this.
03:01Well, I mean, even in the Warner Brothers Discovery deal, there's a lot of big banks, bridge loans.
03:05I mean, bringing back terms we haven't heard in a while, you know, a bridge loan,
03:08which will be refinanced with, you know, a bond deal or something like that.
03:10Some of the traditional M&A financing seems to be coming back.
03:14But these private credit folks, they're not going away because the money continues to flow into that asset class.
03:20Yeah, the money continues to flow.
03:22And I think, you know, I think every competitor of a private credit firm really understands that,
03:27you know, they're not going away.
03:28Like, you should be very careful.
03:30You are, you know, if you're a bank for these financing deals, you're going up against a lot.
03:34I mean, yeah, you look at the Warner Brothers situation, I mean, the amount of firms that were involved in each of those bids,
03:40it's kind of crazy to say, you know, it was banks, but it was also private credit firms and alternative asset managers.
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