Deutsche Bank, Credit Suisse and UBS: what they have in common; where they differ

As universal banks with a presence worldwide, Deutsche Bank, Credit Suisse and UBS generate a large part of their earnings outside their home market, and therefore, apart from economic conditions at home, the trend in the world economy and global assets form the framework for their activities. Economic conditions worldwide are generally good at present, and this is expected to remain the case in the next two years.

In the last few years, UBS has generated more constant and higher earnings than Credit Suisse and Deutsche Bank. This shows that its activities are already better adjusted to changed economic conditions and more stringent regulatory requirements after a largely completed restructuring. Credit Suisse is currently busy implementing its strategic restructuring which involves focusing first and foremost on asset management and its further growth, while continuing to shed old activities. In spite of significant progress, however, the bank still has a lot of financial and organisational work to do, and this is still dampening its earnings strength and risk profile. In contrast, Deutsche Bank’s restructuring is only just beginning. Mediocre success in cost-cutting, a weakened market position and limited earnings strength have led to a further change at the helm of the bank and to renewed calls for a fresh rethink of the strategy in Investment Banking. The bank still faces a fundamental dilemma, namely that the traditional core business is focused on activities which are being severely depressed by stricter requirements in terms of capital adequacy and debt. Generating satisfactory equity ratios therefore remains a major challenge for the bank. Nevertheless, we should not overlook the progress which it has made in running off legacy assets, reducing legal risks and in relation to its capitalisation.

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