March 16 (Reuters) - Banks’ return on equity levels will be pressured in 2009 due to an increase in the fees the U.S. Federal Deposit Insurance Corp charges banks to replenish the government’s deposit-insurance fund, Friedman Billings Ramsey said.
“We believe stocks that have both a premium valuation and are likely to experience the most pressure to return on equity (ROE) will be the ones to experience the largest hit to valuation as a result of rising FDIC rates,” analyst James Abbott said.
On Feb. 27, the FDIC approved a package of measures aimed at raising as much as $27 billion this year in assessment revenues, including $15 billion from a one-time fee of 20 basis points (bps) in the third quarter. [nN27340481]
“Depending on whether industry pressures lead to a decrease in the special assessment to 10 bps, we expect consensus 2009 ROE will decline between 60 bps and 150 bps from current levels, further restraining and/or pressuring stock valuations in 2009,” Abbott said. (Reporting by Archana Shankar in Bangalore; Editing by Anne Pallivathuckal)