UBS (NYSE:UBS), last year, started an ambitious plan to turnaround its investment banking business, which registered heavy losses during the global financial crisis, hoping to better compete with rivals such as Morgan Stanley (NYSE:MS), JPMorgan (NYSE:JPM), Credit Suisse ( CS ), and Goldman Sachs (NYSE: GS). We have a $20.11 price estimate for UBS , which is slightly ahead of the current market price.
We have a $20.54 price estimate for UBS , which is slightly ahead of the current market price.
Investment Banking division may struggle to cope with Swiss regulations
A year on, some concerns remain, with the company being hit by an exodus of talent as a result of its not so attractive pay packages, when compared with those during the times before the financial crisis.
In addition, the bank is lobbying to delay the introduction of the new Swiss capital rules by a year to allow more clarity on international regulation. The Swiss capital regulations are much more stringent than the Basel III regulations, the new global regulatory standard on bank capital adequacy and liquidity. This development could hurt UBS as it impacts its ability to compete with other global investment banks in the FICC trading space, a business that requires large reserves of capital and is fiercely competitive.
As recently as Friday, the WSJ reported that the bank could consider splitting its Swiss unit off or separating it from the remainder of the bank to avoid Swiss rules from impinging on the rest of the its operations.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.