UBS boss Sergio Ermotti is slated to give investors an update later this month, followed by Credit Suisse. Hopes for new impetus at these giants are being dampened by a frosty trading environment.
Switzerland's two big banks are not happy with their share price – neither UBS CEO Sergio Ermotti nor Credit Suisse boss Tidjane Thiam have made a secret of this. Doubters among the banks investors are hoping for new ideas when the two provide strategy updates for their respective institutes this quarter.
Until now, nothing has helped to hoist the stock price of either bank, which have largely languished for the past three years: Ermotti fulfilled his mandate to shift towards private banking already last year, and Thiam revived Credit Suisse and replenished its severely-depleted capital.
Sentiment Worse Than 2015
Conditions for the Swiss duo aren't getting any easier: Ermotti recently told «Bloomberg» that sentiment was even worse than 2015, when markets swerved. Then, UBS' shares briefly climbed over 20 Swiss francs (they are currently sidelined at 15 francs), only to shed more than 10 francs in the following year.
The downturn comes as Singapore's largest banks also manage investor expectations lower, as finews.asia reported in August, due to due to trade tensions between the U.S. and China, as well as a softer loan outlook following property cooling measures at home.
Even if Ermotti can manage to enliven shareholders in UBS' first investor event in four years, he can do little about headwinds facing major banks. The Swiss bank's valuation is «unduly dragged down by European macro, which has little to do with the UBS core business model,» analysts at Morgan Stanley said this week.
Powerpoint Marathon
That isn't likely to change anytime soon. Ermotti, who lost one of his closest lieutenants last week, said recently he doesn't plan to reveal any big changes in strategy. Instead, its top management will use a nine-hour Powerpoint marathon to «better explain» how existing plans will be realized.
Investors can expect more of Thiam, who is scheduled to address shareholders in December. The Credit Suisse boss has to provide the «what next» for investors, after absolving a grueling three-year restructuring plan – successfully, as finews.asia wrote in July.
Wary of Big Banks
But Thiam also mentioned «nervousness» in markets, as news wire «Bloomberg» reported. 2015 is a bad memory not just for Ermotti: Credit Suisse investors also remember the rough ride suffered three years ago.
Then, oil prices crashed, the Hang Seng index dropped by one-third, and Credit Suisse shareholders saw their holdings diluted by a 6 billion Swiss franc ($6.1 billion) cash call. Unsurprising that shareholders are still wary about bulking up on either big Swiss bank – and doubtful if either Ermotti or Thiam can generate enough excitement later this quarter to banish the uncertainty.
