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UBS may benefit more than others from Trump win, HSBC says

Saturday, November 12, 2016 - 12:42

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UBS Group AG is one of the European banks that stands to benefit the most from Donald Trump's election victory if he follows through on pledges to slash taxes and ease regulation of financial institutions, according to HSBC analysts.

[ZURICH] UBS Group AG is one of the European banks that stands to benefit the most from Donald Trump's election victory if he follows through on pledges to slash taxes and ease regulation of financial institutions, according to HSBC analysts.

The Swiss bank draws 39 per cent of its revenue from the US, said analysts led by Alevizos Alevizakos, who has a buy rating on UBS. That's a bigger share than European rivals including Barclays Plc, Credit Suisse Group AG and Deutsche Bank AG, they said in a note Friday.

"A shift towards a more lenient regulatory environment in the US, with lower tax rates for wealthy individuals and corporates, could increase its US earnings," the analysts wrote.

They cited reports suggesting Federal Reserve Governor Daniel Tarullo, who took a tough stance on banks, may be replaced under the next president.

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UBS shares surged 8.7 per cent on Thursday, the most since Aug 2011, to lead the Stoxx Europe 600 Banks Index, which rose 2.3 per cent. The bank's shares were up 1 percent at 11.13 am Friday in Zurich trading.

UBS Wealth Management Americas posted its highest pretax profit in at least two years in the third quarter. The unit comprises about half of the bank's business in the US, the analysts at HSBC estimated, with the investment bank accounting for about 35 per cent.

Mr Trump posted a statement Thursday saying that his team will work to dismantle the 2010 Dodd-Frank Act, part of the government's answer to the 2008 financial crisis. His transition website also called for a moratorium on new rules and addressed plans for a tax-code overhaul.

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