What’s next for UBS in the wake of the rogue trading scandal?
Analyst Marc Deuster at Switzerland-based Bellevue Group identifies four more shoes to drop.
- Erosion of client trust: The obvious failures of risk management are likely to make client relations even harder. It might take a couple of quarters, but the head is likely to show up financially.
- Erosion of employee loyalty: Employees are likely to face “schadenfreude” and “sarcasm” as they spend undue time trying to convince clients that everything is OK. This will have a big psychological impact, and if there’s a big bonus hit due to the $2.3 billion loss then that will make talent retention even harder.
- Immediate profitability hit: Regulators are likely to look even less kindly on attempts to recognise tax loss carry forwards.
- Regulatory backlash: Critics of big banks are likely to have even more firepower, pushing more aggressively to ring-fence certain parts, and break them up.
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