Financial management consultant Mark Zandi predicts that the three big banks will lose more than $50 billion in the first quarter of 2019.
Zandi says that the “Big Three”–Citigroup, Bank of America and Wells Fargo–will all see a loss of more than 30 percent of their assets by the end of 2019, with Wells Fargo reporting the worst of the three.
Zankis predicts that banks will have to make more aggressive moves to keep their customers, who he estimates will lose $6 trillion by the time the next financial crisis hits.
In a letter to clients this week, Zandi said that his predictions have been borne out in the past few months, when he predicted that Wells Fargo would be the biggest victim of the next economic crisis, losing nearly $10 billion in value in just one day.
I think we’ve seen a lot of this before, and it’s only going to get worse, he said.
He also believes that the banks will need to cut costs and offer more attractive products to their customers in order to survive.
“If the banks are going to survive in the years ahead, they need to be able to offer better value for customers and offer better products, and that’s where they need help,” he told investors at a recent conference.
The banks have been trying to turn things around over the past several years, but Zandi says they have to “rebuild” their product in order for it to survive the next downturn.
They need to sell more products, improve the customer experience and make sure they have a quality product, he told the crowd.
At least for now, Zankis predicts that banks should not be surprised if they see another financial crisis coming.
A recent financial-services survey by McKinsey found that the three biggest banks are projected to lose $50-60 billion in 2019.
Zandi has been more optimistic than his peers about the banks’ financial health, predicting that they could be profitable in 2020 and 2021.