More Firms Likely To Follow UBS and RBS and Exit Businesses


The world will get smaller.

Investment banks must take further actions to improve returns and more will follow firms like UBS and Royal Bank of Scotland that have exited businesses, McKinsey & Co. has said.

Bloomberg reports that only five or six companies will remain 'bulge bracket' firms that offer all investment banking and trading products worldwide, the consulting firm has said in a report titled After the Reckoning.

Others will step back from some businesses to focus on areas where they have a competitive advantage, according to the report.

'We have already seen a few early movers exit capital-intensive fixed-income businesses or scale-intensive cash equities businesses to focus on areas where they were better able to compete; we will see more such moves in the future', McKinsey analysts said in the report.

UBS, which has been the most aggressive in reducing costs and risk-weighted assets according to the report, said last year it was trimming 10,000 jobs and exiting many fixed-income businesses. RBS plans to close or sell its unprofitable cash equities, mergers advisory and equity capital markets divisions, the Edinburgh-based firm said last year.

Hit the link below to access the complete Bloomberg article:

Wall Street’s Bulge Bracket May Shrink to 5 Firms, McKinsey Says

Barclays Said to Plan 15% Job Cuts at Asian Investment Bank

Commerzbank to Cut 4,000-6,000 Jobs by 2016 to Meet Profit

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