Avoid Deutsche, Goldman, Favor C Suisse, Morgan Stanley, UBS

Number One

At least that's what the smart money's saying.

JPMorgan Chase, the largest U.S. bank by assets and the top investment bank by fees, is questioning the so-called universal bank model’s future.

Bloomberg reports that top-tier investment banks are 'uninvestable at this point with a risk of spinoff from universal banks', JPMorgan analysts led by London-based Kian Abouhossein wrote in a research note Thursday. They cited potential rule changes and curbs on capital and funding.

Investors should avoid Goldman Sachs and Deutsche Bank because of pressure on earnings and the unknown impact of new regulations, according to the report. Both firms rank among the biggest sales and trading rivals for New York-based JPMorgan, which isn’t mentioned in the report.

Instead, the analysts favor UBS and Credit Suisse and New York-based Morgan Stanley, owner of the world’s biggest brokerage, because of their restructuring potential and ability to release capital.

In the meantime, Bloomberg also reports European corporate and investment banks face a reduction in profitability from increased taxation, compensation restrictions and regulatory burdens, according to a report by Oliver Wyman and Morgan Stanley.

Return on equity, a measure of profitability, could decline by 2 percentage points to 3 percentage points, as regulators seek to reduce the interdependence of banking markets consultant Oliver Wyman and New York-based Morgan Stanley said in the report thi week. The industry has as much as $15bn of annual expenses to meet the higher funding and operating costs, they said

JPMorgan Analysts Say Big Investment Banks Are ‘Uninvestable’

European Wholesale Banks Seen Facing Squeen on Profits

 

 

JefferiesAnd the Best Place to Work in the global financial markets 2016 is...

Register for Financial Markets News Alerts