Concern about new cuts to the big banks

2020 is already a historic year for UBS and Credit Suisse: In the same year, both houses will get new chiefs. And both Thomas Gottstein at Credit Suisse, as wel

Concern about new cuts to the big banks

2020 is already a historic year for UBS and Credit Suisse: In the same year, both houses will get new chiefs. And both Thomas Gottstein at Credit Suisse, as well as Ralph Hamers from the fall of the UBS need to prove himself as a crisis Manager.

By the fear of an economic crisis, triggered by the corona pandemic, the shares of both big banks under the wheels. Even if it was on Tuesday again a little upwards, so both share the big banks ' record but under the brand of 10 francs. And UBS is only rated with 60 percent of its book value, when Credit Suisse is 50 percent.

at all levels of the business, the consequences of the corona of a crisis raining down on the banks: the ongoing fees depend on revenue from the volume of assets under management – and these have been devalued by the Crash solid. Bank customers are likely to position themselves in the Wake of the crisis and the banks ' trading income bring. However, the negative effect is likely to predominate.

earnings expectations downward

Thursday is likely to put the European Central Bank to continue the dance of the Central banks to prevent the money smuggling more open. This is likely to help the economy, although hardly for the interest results of banks but this is another blow. And the cooling should extend, in fact, a recession, as credit losses are to be expected.

UBS and Credit Suisse had reduced its return on equity targets only in the past year. "The big banks' projected return targets, I think, is achievable, unless, for example, real estate or business to be sold areas," says Andreas Venditti, a Bank analyst at private Bank Vontobel. The analysts of Zürcher Kantonalbank have revised their earnings expectations for UBS and CS for this year and next year downwards.

An open back door

In terms of target adjustment is to hear from big banks so far, nothing. UBS, therefore, for the current year, a return on equity of 12 to 15 percent. A particularly ambitious growth seems to target the core division, the assets of management, which is headed by Iqbal Khan and Tom Naratil. The pre-tax profit is expected to rise per year to 10 to 15 percent. And the new Credit-Suisse-Chef Thomas Gottstein confirmed in mid-February of this year, a return on equity of around 10 percent.

But what to do when, because of the cooling, the income will come under new pressure? Further savings are likely to be a response to it.

So, Credit Suisse had to have the publication of the lowered goals, a back door left open and declared, additional savings have been identified to achieve even in a challenging market situation, the new return target. "I'm going to assume that Credit Suisse will push your costs this year in addition to several Hundred million," says therefore, expert Venditti.

UBS is looking to save this year a billion. The money will be fully reinvested, such as, for example, in the digitization. The big Bank could now defer a portion of these investments – or-saving efforts intensify. To play such thoughts do not want to comment on the two big banks.

employee representatives have feeling given the situation, nothing Good: "Should there be a recession, so I think it is possible that banks' additional cost-cutting efforts, including personnel reductions, even if already a lot has happened," said Denise Chervet, Director of the Swiss banking personnel Association.

Whether and how the new cuts will come, will depend on whether the fear of Corona in the global economy missed only a short damper or the slowdown extends into the second half of the year.

Created: 10.03.2020, 17:07 PM

Updated Date: 11 March 2020, 02:04

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