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Late Lunchtime Links: An enormous new report from UBS advocates enormous new redundancies at Credit Suisse, plus cuts at Barclays and Deutsche

Axe

Credit Suisse is already said to be plotting to make 30% of its MDs and directors in London redundant. Today, banking analysts at UBS say there needs to be urgency to its machinations.

“There is considerable capacity reduction needed [at Credit Suisse], particularly in the investment bank,” say UBS’s analysts.  The current CHF2bn cost reduction programme and 1,500 job cuts in the investment bank are predicated on this being a mere cyclical blip, they claim: “Provided there is no material and sustained market rebound, the investment bank seems outsized, given the likely revenue opportunities ahead.”

Credit Suisse is not the only one UBS analysts think needs to take a scythe to staff. Deutsche does too. So does Barclays Capital. 

At Deutsche, they predict the new co-CEOs Anshu Jain and Jürgen Fitschen will update the market on their plans after the summer holidays. Those plans are likely to involve cost reductions and capital improvements. At Barclays, they say the share price could benefit from greater management emphasis on near term return on equity and less on the belief that better returns will appear when the market improves.

The really big issue, say UBS analysts is the lack of cost flexibility nowadays. With a high proportion of bonuses deferred and a high proportion of compensation paid in salaries, banks can’t cut costs as easily as they once could. They claim that Deutsche Bank started this year with around US$5bn of non-expensed compensation, that Credit Suisse started with $4bn and that Barclays started with $3.2bn.

We have extracted some relevant tables below….

Meanwhile:

Handelsblatt says Deutsche Bank needs to make a lot more investment bankers redundant. (Handelsblatt) 

Credit Suisse’s London CLO head said to be leaving. The unit will be run out of New York. (Bloomberg) 

There are four major elements in a banking union: a common regulatory rule book; a single supervisory body to ensure the rules are consistently applied; a common resolution authority with the power to wind up failed banks, and a common deposit-guarantee fund. None of this is likely to happen any time soon. (WSJ)

Banks are being slow to peg bonuses to performance. (Reuters)

Morgan Stanley now has co-heads of global debt underwriting. (Bloomberg)

Credit Suisse says European  banks would face a £298m loss if the Eurozone ruptures. (Guardian)

Credit Agricole has hired Xavier Musca, a former chief chief of staff of former French President Nicolas Sarkozy, and key eurocrisis negotiator. (Reuters)

“If Europe fails, it won’t come back for a couple of generations,” says Lloyd Blankfein.(DealBook)

Here’s how the crisis will really be resolved. (Telegraph) 

Even if the Eurozone fell apart, it’s hard to see how it would be much of a hit to Germany and its banks. (Reuters)

Iain Macleod, an M&A banker who has spent 11 years working for Deutsche, is leaving to work for iCon Infrastructure, which he will advise on investments in energy, utilities and transport projects. (Bloomberg)

More photos of Kweku Adoboli with guitar in McDonalds car park. (Telegraph) 

Lloyd Blankfein believes he will live to be 117. (Reuters) 

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