Exactly. Notice as well the JP Morgan Chase analyst who believes that UBS needs to step up the risky deals if the bankers want to continue to rake in the big bonus money. This cuts to the heart of the problem that the industry and the public is facing today. To date, no political leaders have shown any serious interest in reforming an industry that relies on excessive risk. If the bankers were willing to accept the downside of risk, it would be less of an issue, but clearly they're not. Until this changes and they're ready to accept real capitalism, risk-free ought to be the norm.
UBS, Switzerland’s biggest bank, had the lowest revenue from sales and trading in the first three quarters of this year compared with eight main competitors and was the only one to report a third-quarter pretax loss at its investment bank.Does this industry honestly believe that they have "the best" out there? Yes, they do, despite all evidence to the contrary. That misguided belief is another reason why we're far away from any honest banking reform. Too many political leaders on both sides (and in the White House) actually believe this.
The Zurich-based firm made more from trading stocks and bonds than the average of its competitors in 2005, before more than $57 billion of writedowns and losses from the credit crisis forced it to shrink the investment bank’s risk-weighted assets 44 percent. A lack of client business, combined with the lowest value-at-risk, meant UBS barely made enough in the third quarter to pay the 17,000 bankers in the unit.
“They have to start taking risk again or to pay less,” said JPMorgan Chase & Co. analyst Kian Abouhossein, whose recommendations on UBS produced the second-highest total returns over the past year, according to data compiled by Bloomberg. “The question is do you really need the best people in the market if you’re just running a very flow-oriented business? That’s the dilemma that they need to decide.”
