Q: What is it that makes you think less of small and midsize banks in this environment?
A: What is different about small- and mid-cap banks compared with larger-cap banks is the high percentage of revenue generated from lending operations and spread management. Larger banks have diversified models, and they do not rely as much on spread management. There is nothing wrong with relying on spread management when the yield curve is steep (or the difference between long- and short-term interest rates is great). But at the moment, the yield curve is very flat. And as a result, it's very difficult to earn attractive returns from traditional banking or lending operations.