UK
Despite our direst predictions and the fact that UBS’s exemplary equities staff appear to be doing a good job of subsidising its expensive new fixed income people, persons at UBS should be feeling quite gladsome.
While most banks’ share prices have been tanking, UBS’s hasn’t: as of yesterday it was only 3% off its 2010 peak, compared to 32% for BofA and 24% for Goldman Sachs.
In these days of large share awards instead of a cash bonus, this is not good news for people at BofA and Goldman. They may find their loyalty waning next year unless the stock price recovers.
Unfortunately, this looks unlikely.
The dire state of bank stocks has not gone unnoticed by Dirk Hoffman Becking at Sanford Bernstein. In a note today, he points out that most bank stocks tanked in August, with UBS tanking least of all (see helpful graph below and click to expand if necessary).
Source: Sanford Bernstein
Hoffman Becking points out that the business climate in August wasn’t actually as bad as it could have been – underwriting and M&A activity was up and, ‘wider bidoffer spreads in European Credit, Interest rates and FX following the sovereign debt crisis could allow the banks to benefit materially from a return of customers to the markets.’
Despite this, he’s not holding his breath for anything resembling an improvement in banks’ share prices. In fact, he thinks they’ll fall even lower due to the ongoing Euro sovereign debt crisis and weakness in the US economy.
The exception is UBS, where Hoffman Becking still expects some sort of FICC recovery. This may be delusional wishful thinking: US analyst Dick Bove has apparently been speaking to UBS and elicited that, ‘trading has been poor in the months of July and August.’
UBS had the easiest climb back…they rehired half of deutsche bank and marked back up all the crappy paper on their books…they came out swinging, marketing new products (check out the V10 currency index) which subsequent petered out as they realized th eold business isn’t coming back (V10 currency index, intended to beat carry trades, underperformed the bberg index bby 10% in August!!!!!!!)
UBS will never come back..it was barely tier 1 in 2007 and it still isnt…..