Bank shares were muted this week as investors tempered their
ebullience last week. Last week's surge saw bank stocks jump by at
least 5% over growing optimism of a global economic recovery after
the ECB and the Fed both separately announced plans to buy-back
bonds to ensure liquidity in the system (see
Banks Lead U.S. Markets To Highest Level Since 2007
). But the picture did not remain so rosy when doubts were raised
earlier this week about the sufficiency of QE3 to revive the
slowing U.S. economy. The view that additional fiscal steps will be
needed to complement QE3 forced investors to rethink their
enthusiasm towards the equity market. Later in the week,
worse-than-expected economic indicators for the Eurozone only added
to the aversion.
There were notable events to report for Bank of America (
BAC
), JPMorgan Chase (
JPM
) and UBS (
UBS
) this week.
Bank of America
Bank of America is looking to slim down more quickly than it had
announced earlier, with the U.S. financial giant apparently
planning to do away with as many as 16,000 jobs by the end of the
year. The job cuts which are a part of the ongoing Project New BAC
will bring the bank's employee base to around 260,000 - its lowest
since 2008. The bulk reduction in jobs would also mean that Bank of
America will no longer remain the largest U.S. banking employer,
most likely giving away that honor to JPMorgan Chase.
If Bank of America goes through with this accelerated slimming
plan, it would have slashed 30,000 jobs in about 15 months -
fulfilling the target announced as a part of Project New BAC last
September.
See our full analysis for Bank of America
JPMorgan Chase
Regulatory pressure on the country's largest bank continues to
mount, with the Federal Energy Regulatory Commission (FERC)
directing the bank's power trading arm - J.P. Morgan Ventures
Energy Corp. - to prove that it hasn't violated any
regulations and to also justify why its energy trading
authorization should not be cancelled. JPMorgan Chase is already
under a Senate probe over the multi-billion dollar hedging loss it
suffered over Q1-Q2 2012 - the findings of which are expected to be
published later this year.
See our full analysis for JPMorgan Chase
UBS
The largest Swiss bank may lose as much as 10% of the assets it
currently manages for its European clients in Switzerland-based
offshore accounts, according to the bank's wealth management
head Juerg Zeltner. The significant outflow in the assets
under management is expected to be the direct result of the series
of tax agreements Switzerland has entered with European nations
which alleged that the country's banking system allowed foreign
nationals to evade taxes. UBS manages about $300 billion worth
of assets from European clients, and this figure could shrink
by CHF 12-30 billion ($13-32 billion) over coming
years.
You can read more about this in our article: Tax Agreements
Could Shrink Swiss Bank Client Assets By 10%.
See our full analysis for UBS
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