Credit Suisse has downgraded UBS from Outperform to Neutral. CS says that UBS’ “problems persist” and that it will be tough for the firm to rebuild its reputation after those horrific writedowns:
Now that the writedowns have been reduced to manageable levels (we estimate a further SFr2.5bn for the current quarter), management face the challenge of rebuilding the franchise. We expect this to be a difficult job.
The investment bank may be the least of the worries: We have reduced our estimates to reflect the de-risking and reduction in trading books, but we can see how UBS might make its target of SFr4bn PBT in “normal conditions”; our actual assumption is SFr3.5bn by 2010. However the wealth management franchise also seems to be facing some challenges.
CS cuts target from SFr 45.2 to SFr 27.5.