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Europe braces for banking ‘Super Tuesday’

Monday, July 29, 2013 - 01:43

July 29 - A clutch of European banks are primed to lift dividends to put them back on the radar of yield-hungry investors after years spent using cash to repair balance sheets. Angeline Ong reports on what analysts will be keeping an eye on.

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Brace for impact. Things are set to hot up on Super Tuesday as Europe's biggest banks hand in their report cards. Barclays, Deutsche Bank and Santander all posting Q2 numbers, but the key focus will be on leverage ratios. SOUNDBITE: Mediobanca Director, Chris Wheeler, saying (English): "In the case of Barclays clearly what they'll have to talk about is what they're doing to meet the PRA's requirements. UBS will be talking about the different Swiss requirements FINMA, and then Deutsche Bank, it's been rumoured in the press that they're going to talk a lot about how having worked very hard to get their capital ratios in shape, they now have to focus on the leverage ratio." Investment bank profits another big focus, after solid performance from Wall Street rivals. While Credit Suisse's slim-lined investment banking unit boosted Q2 profits, UBS is abandoning fixed-income activities that soak up costly capital. This seems to have paid off, seeing as UBS pre-released Q2 profit numbers that beat expectations. Dividends a third thing to watch for. Santander could slash it's cherished dividend. But away from Spain, analysts expect HSBC, UBS and BNP Paribas to potentially signal better payouts ahead. So does this mean European banks are turning a corner? SOUNDBITE: Mediobanca Director, Chris Wheeler, saying (English): "In the second-half though for the investment banks, we've already seen a mark down in debt capital markets activity, equity capital markets activity, as a result of that volatility. So we're certainly marking down numbers for the second half for investment banking, now, that's for revenues I should say, not costs." Well investment banking not looking great. Chris Wheeler says retail banks may have a better second half, as lending picks up and green shoots of growth start poking through.

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Europe braces for banking ‘Super Tuesday’

Monday, July 29, 2013 - 01:43