Bloomberg Intelligence US Banks Finance Their Own Competition, 25% Auto Tariffs
Mar 27, 2025
Herman Chan, a Senior Analyst at Bloomberg Intelligence specializing in US Regional Banks, dives into the intriguing topic of how American banks are financing their own competition. He reveals that lending to non-bank financial institutions has skyrocketed, with a 16% annualized growth, leaving traditional sectors behind. The conversation also touches on the potential impact of proposed auto tariffs, emphasizing how they could reshape the car market and create both challenges and opportunities for automakers, including a unique advantage for Tesla.
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Banks Funding Competition
- U.S. banks are lending significant amounts to non-bank financial institutions (NBFIs), like private equity and private credit firms.
- This lending has grown significantly, even though NBFIs compete with banks for borrowers.
NBFI Lending Rationale
- Banks lend to NBFIs because they often work with riskier, higher-yield borrowers that banks avoid.
- This allows banks to indirectly access a segment of the market they deem too risky for direct lending.
Tariff Impact on Automakers
- Proposed tariffs on auto imports could negatively impact legacy automakers like Ford, GM, and foreign brands.
- Companies like Tesla, Rivian, and Lucid might benefit as they primarily produce domestically.