Bloomberg reports that UBS’s underperformance hasn’t prevented it from trading at a higher price relative to estimated earnings and book value, as some investors embrace the bank’s focus on wealth management and question Credit Suisse’s decision to remain a full-service investment bank.
'UBS made it clear that it will focus on private banking', said Florian Esterer, a senior portfolio manager who helps oversee about $3.8bn at MainFirst Schweiz AG in Zurich. 'Credit Suisse is being punished for still being active in all areas of the investment bank, without there being evidence that it has enough scale or that it can make good returns on equity'.
Morgan Stanley analysts last month removed Credit Suisse from their 'most preferred' list and added UBS, citing better dividend prospects.
'We think confidence will build over UBS potentially having a special dividend in 2015 from faster deleveraging', the analysts, led by Huw van Steenis, wrote in a March 25 report. 'Meanwhile, we think Credit Suisse will deliver on costs and top line but think may take longer to return to a 100 percent cash dividend'.
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