The Zacks Analyst Blog Highlights: UBS, Deutsche Bank, Royal Bank of Scotland
Group, Credit Suisse Group and Citigroup
CHICAGO, Oct. 30, 2012
CHICAGO, Oct. 30, 2012 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include UBS AG (NYSE:UBS), Deutsche Bank
AG (NYSE:DB), Royal Bank of Scotland Group Plc. (NYSE:RBS), Credit Suisse
Group AG (NYSE:CS) and Citigroup Inc. (NYSE:C).
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from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday's Analyst Blog:
UBS Contemplates 10,000 Layoffs
UBS AG (NYSE:UBS) is likely to make 10,000 job cuts, according to a report in
the Financial Times. The layoffs are part of the company's efforts to
reorganize its business and split its investment bank. The details are
expected to come up this week.
According to the report, UBS will pool a significant part of its fixed income
trading business into a non-core unit, which would be led by Carsten Kengeter,
a co-head of the investment bank. In due course, this unit would be wound
down. As a result, the investment bank unit would shrink and be comprised of
equities trading, foreign exchange and advisory activities.
The layoffs represent around one-sixth of the company's total staff strength
as of June 2012. It is also over and above the 3,500 job cuts program which
was announced last year and is currently underway. The layoffs will take place
in a phased manner.
The layoffs, designed by Chief Executive Sergio Ermotti, would lead to a
decrease in risk-weighted assets and lessen the complexity of its investment
banking division. Thousands of back office operations will be reduced and
therefore the costs associated with such support activities will be lessened.
With UBS facing crises since the financial meltdown, besides incurring trading
losses and outrage worth billions of dollars, the overhauling measures are
aimed at developing its core businesses and downsizing its troubled units. The
company has been trimming its investment bank unit over the past year and aims
to refocus on building its market-leading wealth management and asset
UBS, which is scheduled to report its earnings tomorrow, is not the only firm
that is overhauling its business and making job cuts. Amidst the stressed
operating environment, lower returns and stringent capital norms, other banks
are rightsizing their business to meet such challenges.
In the recent months, Deutsche Bank AG (NYSE:DB) also announced its plans of
revamping its business, which involves change in compensation practices, job
cuts as well as asset sales. Moreover, Royal Bank of Scotland Group Plc.
(NYSE:RBS) and Credit Suisse Group AG (NYSE:CS) have opted to make layoffs to
address such issues. A number of U.S. banks like Citigroup Inc. (NYSE:C) also
chose business restructuring post the financial crisis.
Given the stressed operating environment, we believe any significant
improvement in the earnings of UBS would remain elusive in the upcoming
quarters. However, prudent business model changes can lead to improvement in
efficiency and bolster its competitive edge.
UBS currently retains a Zacks #3 Rank, which translates into a short-term Hold
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