UBS shuffles top management; Treasury issues Libor tax guidance

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Receiving Wide Coverage ...

UBS stacks the deck

UBS Group hired Iqbal Khan, Credit Suisse’s former head of wealth management, “as part of a broad reshuffle that creates a fresh lineup of potential internal successors to Chief Executive Sergio Ermotti.” UBS also named COO Sabine Keller-Busse as president for Europe, the Middle East and Africa, while Suni Harford, head of investments for the bank’s asset-management business, was promoted to run the entire business. All three are potential internal CEO candidates to succeed Ermotti, who “has signaled a desire to stay for another year or two, having already outlasted most European bank CEOs.”

“The changes come as UBS and other European banks struggle with the effects of low and negative interest rates and stiff competition from U.S. banks,” the Wall Street Journal says.

Khan’s hiring “addresses concerns about succession planning and lackluster performance” at UBS, the Financial Times said. Khan’s “next career move has been the subject of much speculation after his sudden departure from Credit Suisse in July following an internal power struggle.” Wall Street Journal, Financial Times, American Banker

Wall Street Journal

What goes up …
Comerica, which was one of the biggest beneficiaries when interest rates started to rise “from rock-bottom levels in 2016,” is one of the banks most exposed now that rates are falling. “When rates were headed up, Comerica shareholders had no complaints. Comerica’s shares rose 108% during 2016 and 2017 compared with a 46% rise in the KBW Nasdaq Bank Index. Now the shoe is on the other foot. Comerica stock has fallen around 13% so far in 2019, while the bank index is up around 6%.”

“If the global economic picture suddenly improves, U.S.-China trade tensions are resolved and the Fed feels it can stop easing, Comerica shares could rally. Such a scenario seems increasingly remote, though, which means this lender has further to fall.”

Falling short
Toronto-Dominion Bank, Canada’s second-largest bank by market capitalization, “reported quarterly profit growth of more than 4% from a year earlier, driven largely by higher loan and deposit volumes in its U.S. retail operations.” The bank reported net income of 3.25 billion Canadian dollars ($2.44 billion), or C$1.74 a share, compared to C$3.11 billion, or C$1.65 a share, a year earlier. But that failed to meet analysts’ estimates of C$1.77 a share.

Easing the transition
The Treasury Department said “existing financial instruments that switch from Libor to another alternative rate wouldn’t qualify as a ‘taxable event’ under IRS rules.” The proposed move “is expected to allay private-sector concerns over whether such changes would trigger an income tax gain or loss” and “help ease the transition to a new reference rate,” the paper says. Libor is slated for replacement in 2021.

Financial Times

Big on crypto
Elwood Asset Management, a firm owned by the British hedge fund manager Alan Howard, “is planning to launch a $1 billion venture that will put money in a range of cryptocurrency hedge funds, aiming to capitalize on a dramatic revival in the sector this year. The aim is to steer investors towards a select grouping of funds with higher quality operations, so they can avoid blow-ups in a sector full of hazards,” the paper says.

Elsewhere

Looking to buy
BNP Paribas “is hopeful it can beat off rival bidders to secure a deal in the next few weeks” to buy Deutsche Bank’s equity derivatives book, which the German bank is selling as part of a massive restructuring. “BNP is already close to taking control of Deutsche Bank’s prime brokerage business, which serves hedge fund clients. A preliminary deal was struck in July which is expected to be formalized early next month.”

Quotable

“As we head into the final quarter of the year, the macroeconomic environment has become less supportive.” — CEO Bharat Masrani of TD Bank, which failed to meet earnings expectations for its fiscal third quarter

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