Dick Bove: UBS (UBS) Will Still Be Profitable, But Has Management Issues
Tweet
Share
E-mail
Get Alerts UBS Hot Sheet
Price: $28.06 -0.21%
Rating Summary:
9 Buy, 10 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
Rating Summary:
9 Buy, 10 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
Join SI Premium – FREE
Rochedale Securities' Dick Bove says UBS (NYSE: UBS) will report a profit amid the $2 billion trading loss its expects to record in the third quarter.
Speaking to Bloomberg early Thursday, Bove admitted UBS has been struggling for the last few years to meet the strict Basel capital requirements. "This is a setback... but the bank will show a profit this year," Bove said on the news.
Bove also offered some estimates for UBS's fiscal 2011 earnings: now expects earnings of $1.11 per share, compared with a much more robust Street consensus of $2.09 per share. He thinks UBS will show profits over the next two years.
"The issue continues to be a management issue... There's been a lot of upset in the capital markets division... as people have been leaving. There's been cost-controls put on that division...what this is showing is that they don't have the technology in place to control their trading operations," said Bove. "So it's not like the problem crept up in an area known for its excellent management and employees."
When asked whether UBS will need to become smaller in order to deal with the multiple factions springing up within the bank, Bove said yes, insisting UBS is already heading in that direction. "There's a limit on how fast they can grow their capital from internal sources. They're unlikely to do a stock offering, so in order to meet capital requirements, they are shrinking the bank," he continued.
Another panel question asked: "what does this mean for Oswald Gruebel?" Bove said the CEO is "extraordinarily impressive... if anyone has the capability to straighten out the mess that is UBS, he's the guy to do it."
UBS shares are 9 percent lower Thursday morning.
Speaking to Bloomberg early Thursday, Bove admitted UBS has been struggling for the last few years to meet the strict Basel capital requirements. "This is a setback... but the bank will show a profit this year," Bove said on the news.
Bove also offered some estimates for UBS's fiscal 2011 earnings: now expects earnings of $1.11 per share, compared with a much more robust Street consensus of $2.09 per share. He thinks UBS will show profits over the next two years.
"The issue continues to be a management issue... There's been a lot of upset in the capital markets division... as people have been leaving. There's been cost-controls put on that division...what this is showing is that they don't have the technology in place to control their trading operations," said Bove. "So it's not like the problem crept up in an area known for its excellent management and employees."
When asked whether UBS will need to become smaller in order to deal with the multiple factions springing up within the bank, Bove said yes, insisting UBS is already heading in that direction. "There's a limit on how fast they can grow their capital from internal sources. They're unlikely to do a stock offering, so in order to meet capital requirements, they are shrinking the bank," he continued.
Another panel question asked: "what does this mean for Oswald Gruebel?" Bove said the CEO is "extraordinarily impressive... if anyone has the capability to straighten out the mess that is UBS, he's the guy to do it."
UBS shares are 9 percent lower Thursday morning.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Growth isn't weak enough to truly undercut inflation pressures - BMO
- Comerica (CMA) PT Raised to $54 at Piper Sandler
- Warren Buffet's Berkshire stock target raised at UBS into earnings
Create E-mail Alert Related Categories
Analyst CommentsRelated Entities
UBS, Richard Bove, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
