UBS and Deutsche Bank Top Investment Banks Picks, JPMorgan Says

(Bloomberg) -- UBS AG, Switzerland’s biggest lender, is one of the best placed investment banksglobally as it gains from its advisory business and has limited additional capital needs, according to analysts at JPMorgan Chase & Co.

“UBS is on track as a strong cash equity, mergers and acquisitions house, and asset gatherer” in an environment of declining revenue from fixed income, currencies and commodities, the analysts led by Kian Abouhossein with an overweight rating on the stock, wrote in a note to investors today.

Deutsche Bank AG, Germany’s largest lender, has potential to increase revenue by targeting multinational corporations and may benefit from growing intra-Asia Pacific business, the analysts wrote. JPMorgan raised the bank to overweight from neutral.

Both banks also stand to gain from superior capital ratios in an environment where litigation remains a risk. UBS can take as much as 2.3 billion Swiss francs ($2.6 billion) in additional litigation charges and still maintain a 13% Basel III core Tier 1 ratio in 2016, the analysts wrote.

JPMorgan cut BNP Paribas SA to neutral from overweight because of lower capital returns following an $8.9 billion penalty incurred with the U.S.

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