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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Quick takeaways
- U.S. banks are increasingly lending to shadow banks, significantly boosting their portfolios despite elevated risks and regulatory concerns.
- Donald Trump's proposed auto tariffs could undermine global carmakers while benefiting Tesla by impacting consumer prices and market dynamics.
Deep dives
The Rise of Non-Traditional Lending
U.S. banks are increasingly lending to non-bank financial institutions, such as private equity and private credit firms, which has become a significant part of their commercial loan portfolios. Some banks, like Bank OZK and Western Alliance, now have over 50% of their loans directed towards these shadow banks. This trend emerges as traditional borrowers become more cautious in a challenging economic climate with elevated interest rates. The banks are leveraging these loans to boost their growth despite the potential risks associated with lending to higher-risk customers.
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