First Brands Raises Bank Regulatory Risk, JPMorgan Analysts Say

The collapse of auto-parts supplier First Brands could have an indirect impact on the banking sector, with knock-on risks including legal claims and regulatory action, according to analysts at JPMorgan Chase & Co.

“Overall we are mainly concerned about underestimating the secondary derivative effects such as revenue impact but most importantly lower oversight and hence regulatory arbitrage between regulated large banks and nonbank players,” analysts led by Kian Abouhossein wrote in a note Tuesday.

First Brands filed for bankruptcy last month, with more than $10 billion owed to some of Wall Street’s biggest names. Federal prosecutors are now looking into ...