Europe’s biggest investment banks, caught between worsening earnings prospects and demands for more capital, may have little choice but to accelerate asset reductions and job cuts, Bloomberg writes..
UBS AG, Deutsche Bank AG, Barclays Plc and Credit Suisse Group AG, which all report third-quarter results over the next eight days, may eliminate more jobs, speed disposals and scale down some businesses to slash costs and build up reserves amid the region’s sovereign debt crisis, said JPMorgan Chase & Co. analyst Kian Abouhossein.
The four banks have disclosed plans to shrink their combined risk-weighted assets by as much as $415 billion to prepare for stricter capital requirements under Basel III rules. As the euro area’s sovereign debt crisis erodes earnings, the banks may have to speed up reorganization plans at their securities units, which will be most affected by the changes in Basel rules, if they want to avoid selling new shares.
“Everybody is trying to reduce risk-weighted assets as soon as possible,” said Abouhossein, who is based in London. “They’ve already all started, but they’ll probably find it harder than expected because the environment is clearly getting tougher….”
http://www.businessweek.com/news/2011-10-23/ubs-deutsche-bank-seen-speeding-cuts-as-europe-crisis-worsens.html
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