Bloomberg News reports that UBS could nearly quadruple its litigation reserve to $7.8bn by 2016 and still have a common equity ratio of 13%, Kian Abouhossein and Amit Ranjan, banking analysts at JPMorgan in London, said in a note today. They included a dividend yield of 10.3% in this estimate.
UBS had $2.01bn in reserve for legal matters at the end of the first quarter.
By contrast, Credit Suisse reported a common equity ratio of 10% at the end of March. Factoring in a $2.6bn fine to settle a U.S. tax-evasion case in May, that figure drops to 9.3%, the lowest of the 17 global investment banks tracked by Bloomberg Industries.
'On litigation, in our view CSG appears better placed than UBS', Abouhossein and Ranjan said in their note. 'However, UBS has sufficient cushion in our estimates to take litigation charges'.
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