The Zacks Analyst Blog Highlights: UBS, Deutsche Bank, Royal Bank
of Scotland Group, Credit Suisse Group and Citigroup
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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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 management
business.
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 rating.
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