Last week was the week of the Morgan Stanley European Financial Services Conference. Financial News sent a journalist along. That journalist came away with the impression that things are volatile, US banks are the best investment and BarCap is the best bank inEurope.
We weren’t at the conference. Fortunately, however, the banks that were have posted their presentations on their websites. Having trawled through these, we have extracted the most salient points below. (UBS and RBS were the only ones to say anything new and interesting)
1. UBS will be basing its bonuses on its cost ratio being lowered
2. UBS will be cutting more than CHF500m of costs from its investment bank this year
Based upon average compensation of CHF337k for 2011, this suggests the elimination of another 1,500 jobs at UBS’s investment bank in 2012. We understand several senior level equity derivatives redundancies happened last Friday.
3. UBS is incapable of improving its bottom line much before the end of 2013
Depressingly, and even though UBS is cutting all these costs in 2012, the impact on the bottom line will be far from immediate. Witness this statement, also in UBS’s report: