The liabilities are subject to reserve requirements, however. This means that the bank cannot have more financial assets than it has liabilities. So debt utilization is an entirely different animal in the banking industry than it is in conventional industries.

Therefore, typical debt utilization ratios are of little relevance. Interest coverage is tied to liquidity, and is therefore not measured for banks. The debt-to-equity ratio is measured, however. For Wells Fargo, this is 3.01. For Bank of America it is 3.97. The industry average is 3.28. The significance of this metric in the banking business is that the higher the ratio, the riskier the business. Another measure is the leverage ratio. This is at Wells Fargo 12.0, versus 9.7 at Bank of America and 14.7 overall. Thus, both of these companies are less highly leveraged than the industry as a whole. Wells Fargo has a lower debt-to-equity ratio indicating lower...
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