The Zacks Analyst Blog Highlights: UBS, Bank of America, JPMorgan Chase,
Barclays and Royal Bank of Scotland Group
CHICAGO, Dec. 18, 2012
CHICAGO, Dec. 18, 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), Bank of
America Corp. (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Barclays Plc.
(NYSE:BCS) and Royal Bank of Scotland Group Plc. (NYSE:RBS).
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from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday's Analyst Blog:
UBS to Resolve LIBOR Scam with $1B?
UBS AG (NYSE:UBS) is said to be nearing a deal to pay a penalty of over $1
billion over its alleged involvement in the manipulation of the London
Interbank Offered Rate (LIBOR), according to a Wall Street Journal report. The
announcement regarding the settlement is most likely to come next week. Since
negotiations are still underway, the final amount could alter.
As a matter of fact, UBS has been subject to scrutiny over this issue for
quite some time by the U.S. Commodity Futures Trading Commission, the Justice
Department, the U.K. Financial Services Authority, and the Swiss regulators.
In addition to UBS, several of the big banks includingBank of America Corp.
(NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM) are under the strict vigil of
the regulators around the world in connection to the LIBOR manipulation scam.
The LIBOR is determined on the basis of estimates of rates at which banks find
it appropriate to borrow from each other. It is alleged that banks coordinated
amongst themselves and submitted false rates. This fraudulent move was made to
profit from trades or to appear more creditworthy than they actually are.
Since LIBOR is used as a benchmark for several lending transactions around the
world, any manipulation would impact billions of users around the globe.
Hence, regulatory authorities are investigating the matter thoroughly and plan
to put forward an exemplary judgment so as to terminate such shrewd practices
in the future, bring justice to the sufferers and punish the wrongdoers.
Earlier in the year, Barclays Plc. (NYSE: BCS) admitted to its fraudulent
practices and agreed to pay a penalty of $450 million for rigging the LIBOR.
If UBS is imposed with a fine of over $1 billion, it would significantly dwarf
the Barclays penalty amount. On the other hand, Royal Bank of Scotland Group
Plc. (NYSE: RBS) also hopes to achieve a settlement early next year.
Currently, we remain skeptical regarding UBS' penalty amount and wait to see
what the final amount comes up to. While the settlement will put to rest a
long-drawn investigation and UBS can breathe relief, we believe that it will
adversely impact its financials.
Also in November, the company was slapped with a fine of £29.7 million ($47.6
million) for failing to prevent significant unauthorized trading that resulted
in a substantial loss totaling $2.3 billion. The losses were incurred mainly
on exchange traded index future positions. The penalty was imposed by the
British authorities, The Financial Services Authority (FSA).
Notably, UBS' business has been severely impacted by the financial crisis and
the company suffered huge losses on credit bets during that time. However, the
Swiss government came to its aid and currently the company is subject to
stringent capital norms. Moreover, the tax probe and mounting legal claims
have added to its woes.
However, amidst such crisis and a challenging operating environment as well as
increased capital needs, in recent months, the company announced overhauling
measures, which are aimed at developing its core businesses and downsizing its
While these are encouraging, we believe the troubles for this stock are far
from over. Hence, for UBS, which currently retains a Zacks #4 Rank, implying a
short-term Sell rating, we believe that following the final announcement of
the penalty, estimates could go down leading to a deterioration in its Zacks
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