Ratio of cash to corporate loans has more than quadrupled since June 2008. This is because banks are fearful that regulators might further tighten regulatory requirements on banks and the slack demand for loans.
Currently, the industry is looking at a ratio of 98 cents to a dollar of corporate loans. This would reduce the return on equity by 33%. Of course, with a stronger balance sheet, banks will be able to operate more flexibly.
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