May 6 - More pain for Barclays and an overhaul at UBS. As Melanie Ralph reports Europe's banks are still going through a painful remodeling process, which could well be compounded by a new Financial Transaction Tax being discussed by ministers in Brussels.
After years of clawing its way back to health, UBS is finally turning a corner. The Swiss bank beat analysts' expectations with a 7 percent rise in first-quarter net profit to $1.2 billion. In contrast to UBS, first quarter results at Barclays didn't impress. Profits at the British bank fell 5 percent in the first quarter from a year ago thanks to a dent in fixed income revenues. ETX Capitals' Joe Rundle says Barclays has to change tack: (SOUNDBITE) (English) ETX CAPITAL, JOE RUNDLE saying: "It's trying to stick with investment banking and it's really suffering. It can't pay for talent, and an exodus of talent is hurting it, and I expect that decline to happen. And probably at some point Antony Jenkins might have to bite the bullet and say look we're going to get rid of the investment bank, but that's a big big step for Barclays." UBS's shift away from investment banking is what's boosting confidence. Restructuring plans that sees the bank dividing up into different holdings that eases capital requirements pressures is also helping UBS' profile. Reuters Breaking views Robert Cole: (SOUNDBITE) (English) REUTERS BREAKING VIEWS, ROBERT COLE saying: "UBS you recall has reinvented itself or has certainly done a major restructuring a couple of years ago, realizing that investment banking wasn't all that it was cracked up to be and has moved forward putting much more emphasis on wealth management. Barclays, shares down, and the real take away from this is, oh, I wish they'd been doing a bit more of what UBS had been doing." Banks around the world have been trying to get themselves in order following the financial crisis of 2008. And a Financial Transaction Tax could be the next big challenge. It doesn't have global support, but Germany and France have led the campaign for a trading levy. Know as the Robin Hood Tax, these protesters hope that some of the money raised from it will go to fighting poverty. With the European elections just around the corner it could very well help to win over these voters at least.