Financials Weekly Notes: Deutsche Bank And UBS

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Deutsche Bank

Bank shares witnessed a free-fall over the week with most of them losing almost all the value they gained at the end of last week over hopes that the European Central Bank (ECB) will initiate immediate action to counter the deteriorating Spanish and Italian debt situation. Investors eagerly awaited steps from the ECB that would justify chief Mario Draghi’s stance that the Eurozone’s policy-making bank would do everything necessary to protect the euro. And each day of inaction on the ECB’s part sent investor sentiments – and in-turn bank stocks – lower. As seen over previous weeks, European banks saw the largest change in their share prices this week too.

Deutsche Bank (NYSE:DB), UBS (NYSE:UBS) and RBS (NYSE:RBS) reported their performance figures for the second quarter of 2012 this week.

Deutsche Bank

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Deutsche Bank reported a poor quarter this time around, with the largest German bank facing the full impact of the slowdown in the Eurozone. The investment banking division, which has historically been the biggest source of revenue for Deutsche Bank, ended up with revenues a third less than those for the previous quarter – something the bank attributed to the difficult trading environment prevalent over the last three months. The loss in the value of the euro compared to the U.S. dollar and the pound sterling further aggravated the situation for the bank, as this resulted in higher reported expenses for the quarter.

You can read about this in detail in our article: Deutsche Bank Takes Europe’s Woes On The Chin

See our full analysis for Deutsche Bank

UBS

The largest Swiss bank stunned investors earlier this week by reporting significantly lower than expected earnings figures. The bank’s investment banking operations took a significant hit over the period – ending up in the red. A large reason for the loss is the ~$350 million trading loss UBS incurred while acting as a market maker during Facebook’s(NASDAQ:FB) troubled IPO. The bank’s cornerstone wealth management business, however, did put up a good show for the period, with a decent increase in the size of its assets under management.

Details about UBS’s Q2 earnings can be found in our article UBS Reports A Sharp Decline In Earnings, Points $350M Finger At Facebook.

See our full analysis for UBS

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