Regulatory pressureshave altered the landscape of how businesses are choosing to use their capital, and one change that's on the way is more stock buybacks, an analyst told CNBC.
“I think the one thing that people are forgetting is these [companies'] balance sheets are not frozen, they are liquid. So if regulatory capital just goes up, we look at a Goldman Sachs or a Morgan Stanley and say there’ll be buybacks going forward because there’s going to be surplus capital," Brad Hintz, Sanford Bernstein Analyst and former Lehman Brothers CFO in the late 1990’s, said on Monday.
“My guess is we have in anticipation of quantitative easing(QE) where management is saying no, no we are not going to ramp up the balance sheets. We want the regulators to be happy with us. We don’t want to look like we are positioning ourselves to take advantage of QE2,” he said.