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UBS to Merge Equity and Debt Capital Markets in Asia-Pacific

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UBS Group AG UBS is taking initiatives to unite its equity and debt capital market business in the Asia-Pacific region in order to streamline its operations.

Per an internal memo issued by the bank, the step has been taken due to the synergies that exist between the two divisions such as “overlapping investors and product cross-over.” Further, David Chin, head of corporate clients solution business in the region said in the memo, “These changes are aimed at optimizing our business in the region, serving clients more cohesively.”

Gaetano Bassolino, former head of debt capital markets in the region had been appointed the head of Asia Pacific capital markets. Also, per the memo, Hannah Malter, the chief of staff for Asia-Pacific, will be rejoining the equity capital markets to support the firm’s Asia-into-U.S. initial public offerings.

Per a Financial Times article, no jobs are expected to be lost due to this merger. Also, the step has no relation with the recent probe of Hong Kong’s Securities and Futures Commission in its prior initial public offerings (IPOs).

Last week, the commission had placed a ban on UBS Group from sponsoring IPO in Hong Kong for a period of 18 months. Also, a fine of HK$119 million was imposed.

However, the bank mentioned its intentions to contest the regulator’s decision in latest annual filing. Also, it assured employees of continuing "business as normal" via an internal memo till its appeal is heard by the authorities, which it expects to happen in fourth-quarter 2018.

UBS Group’s efforts to bolster performance through restructuring and other financial targets bode well for the long term. Also, effective cost reduction initiatives might continue to support its bottom-line growth. However, pressure on revenues due to suspension from IPO sponsoring and challenging domestic economic conditions remain key concerns.

Shares of UBS Group have gained 14.2% over the past year, outperforming the industry’s rally of 12.5%.

The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

KB Financial Group KB has witnessed 1.7% upward estimate revisions for the last 60 days. In a year's time, the company’s share price has gained more than 27%. It carries a Zacks Rank #2 (Buy).

Lloyds Banking Group plc LYG carries a Zacks Rank of 2. Its earnings estimates for 2018 have been revised 5% upward over the last 60 days. Also, its shares have gained 8% in the past year.

ING Group ING carries a Zacks Rank of 2. The Zacks Consensus Estimate for the company has jumped 7.8% for the current year, in the last 60 days. Its share price has gained 13.8% in the past year.

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