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The charts European banks on Wall Street would like to hide

Before you join a European bank on Wall Street, you might want to consult the charts below. They're from Deutsche Bank and they're not pretty. Basically, they say that some European banks in the U.S. are either unprofitable or barely breaking even.

Cost income ratios at European banks' Independent Holding Companies (IHCs) in the U.S.

Deutsche Bank ugly chart

Those banks are Credit Suisse and UBS. At Credit Suisse's U.S. operations, costs were nearly 120% of revenues in the first nine months of 2016 on an adjusted basis. Unadjusted, they were nearly 140%. At UBS, they were nearly 100% on both measures.

Things don't look much better for Credit Suisse from a return on equity (RoE) perspective. Deutsche says Credit Suisse generated negative returns in the first nine months on both an adjusted and non-adjusted basis. At UBS, however, returns were into double digits.

Credit Suisse RoE

The sorry state of affairs comes as European banks try to put their U.S. houses in order ahead their first U.S. specific stress tests in 2018. Deutsche Bank itself isn't referenced in its analysts reports but as Breaking Views points out, its U.S. tier one capital ratio is below that of peers. 

Deutsche's own charts suggest that the best bank to work for on Wall Street might be Barclays: it has costs under control and it's generating a health return on equity. However, Breaking Views' charts suggest that Barclays' has some leverage issues to attend to before the U.S stress tests. Nowhere is entirely safe.


Photo credit: This little piggy by las - initially is licensed under CC BY 2.0.

AUTHORSarah Butcher Global Editor
  • Ra
    17 November 2016

    They will be ugly since you need talented professionals to pull this up. Instead they use rich networked individuals without enough talent to tackle the situation. No wonder its a piggy scenario.

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