Citi predicts European investment banks will see profit wipe out

European Union

Europe’s investment banks will probably see profit wiped out by restructuring costs in the fourth quarter as they make changes started by their U.S. competitors years earlier, according to Citigroup.

Bloomberg News reports that Deutsche Bank, Credit Suisse and UBS will post losses for the three months through December, while Barclays will be 'broadly break-even', Citigroup’s Andrew Coombs and Nicholas Herman wrote in a report on Wednesday.

Europe’s biggest securities firms are implementing reforms taken by many of their U.S. competitors shortly after the 2008 financial crisis. As the continent’s economies grow more slowly than the bank efforts to cut costs have taken on a new urgency following a revenue slump caused by volatile global markets.

'We expect the Europeans to underperform due to structural trends and revenue attrition on restructuring', the Citigroup analysts wrote. They cited constraints placed on repurchase agreements by leverage limits as well as stronger U.S. primary issuance of securities.

To access the complete Bloomberg News article hit the link below:

European Investment-Bank Overhaul to Wipe Out Profits, Citi Says

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