Deutsche Analyst Smiles On UBS, Credit Suisse

Tom Burroughes

29 January 2009

UBS, labouring under $49 billion of credit write-downs and a legal wrangle over tax in the US, got a fillip yesterday after Deutsche Bank analyst Matt Spick issued a bullish note on the Swiss bank’s ability to cope with the financial crisis.

Mr Spick said that UBS, and Credit Suisse, would face revenue declines but could take cost-cutting measures to offset this.

"2009 is also likely to be a tough year with potential for revenue declines across all business areas, but we think both UBS and Credit Suisse carry less cyclical credit risk than other banks," Spick said in a note to clients.

After the note was disseminated, UBS shares rallied. Yesterday, at 16:00 GMT its shares were up 8.4 per cent from the open at SFr13.93 ($1.204), while Credit Suisse was up 3.31 per cent at SFr29.95 per share.

Mr Spick said he expects UBS to report a fourth-quarter net loss of SFr7.5 billion and predicted a loss of SFr4.2 billion at Credit Suisse during the same period. UBS is due to issue its results on 10 February, with Credit Suisse reporting figures a day later.

"In general, we expect Swiss banks to outperform their European peers in 2009, due to their relative defensiveness against cyclical credit risk and also robust capital," said Mr Spick.

The analyst expects UBS, the world's largest wealth management bank in term of assets, to post a full-year net loss of SFr19.2 billion, with underlying losses in the investment bank and outflows in the private bank.

The analyst also forecast a net loss of SFr6.4 billion for Credit Suisse.