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The reaction to the US Tax Cuts and Jobs Act announced in December was pretty much universally positive among bank CEOs reporting results in January, but the effects varied a lot – mostly due to the fact that levels of historic deferred tax assets (DTAs) are far from equal.
At Goldman Sachs, CFO Marty Chavez said there was “clearly the potential for increased business activity” resulting from more mergers and acquisitions, more financing and more economic growth in general.
After a long period of speculation, the announcement of the reform brought clarity, and Chavez said that dialogue had increased with clients as a result.
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| James Gorman, Morgan Stanley |
Morgan Stanley CEO James Gorman was cautious about predictions, but expected an immediate positive impact in 2018 from the reforms. He noted that the firm operated with a higher tax rate than some peers – it had got more US-centric over time rather than less, largely because of its presence in wealth management, which he reckoned was now about 98% US-focused after the firm sold its European business in 2013.
Bank of America Merrill Lynch (BAML) CEO Brian Moynihan reckoned that the reforms would be positive for clients, but he told analysts that he didn’t envisage running the company any differently with a lower effective tax rate.
