This has been a good week for the banking sector with shares of
almost all banks seeing some growth. The week started slow with
investors keeping a close eye on the tussle between conservatives
and liberals over steps needed to avoid the impending fiscal cliff.
Bank shares received a boost on Wednesday when Citigroup (
C
) announced nearly 11,000 job-cuts across businesses - a move that
was seen by the market as a precedent for more sweeping changes by
the other major banks. Increasing optimism that the government will
get its act together to help boost the economy also lent support to
the overall market towards the end of the week.
Over the week, Capital One (
COF
) also made headlines with its decision to acquire the data
aggregator firm Bundle Corp to boost the capabilities of its
analytics arm, which would eventually help it target potential card
customers better. Among European banks, UBS (
UBS
) grabbed attention when reports indicated that the largest Swiss
bank is keen on acquiring
GE's
(
GE
) Swiss consumer lending business - GE Money Bank
Switzerland.
Citigroup
Citigroup CEO Michael Corbat announced a complete revamp of the
global banking group this week, with the aim of "increased business
efficiency, streamlined operations and an optimized consumer
footprint across geographies." The list of proposed changes entails
a reduction in at least 11,000 jobs which will help the bank save
about $1.1 billion annually starting 2014. Citigroup will incur
charges to the tune of $1 billion in relation to these changes this
quarter.
The announcement comes within days of Citigroup's decision to
cut bonuses and about 150 jobs in its investment banking division
(see
Citigroup's Investment Banking Arm To Slash Bonuses, Shrink
Workforce
).
See our full analysis for Citigroup
Capital One
Capital One, the card-focused banking group which pioneered the
use of analytics to understand consumer spending patterns to come
up with targeted products and offers, is expanding its Capital One
Labs research division with the acquisition of Bundle. Bundle
is expected to complement Capital One's analytics base to bring in
new business avenues in terms of customers as well as local
business tie-ups.
You can read more about this acquisition and its impact on
Capital One in our article titled, Capital One Buys Data
Analytics Firm To Tap Spending Trends At Local Businesses.
See our full analysis for Capital One
UBS
UBS is reportedly following up its decision to slash as many as
10,000 jobs largely from its investment banking operations with a
possible acquisition of GE Money Bank Switzerland. The move
will make it the leader in the Swiss consumer lending industry
dominated by its competitor Credit Suisse (
CS
) and will add about 700 employees spread across 25 branches across
Switzerland. GE Money Bank Switzerland reported CHF 3.96
billion ($4.27 billion) in outstanding loans at the end of 2011,
and the deal is expected to cost UBS around CHF 1.5 billion ($1.6
billion).
More details about this can be found in our article UBS Gets
Back To Basics In Bid For GE's Swiss Lending Unit
See our full analysis for UBS
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