NEW YORK and LONDON, Oct. 19, 2015 /PRNewswire/ -- The Edge forecasted 12 major banks that are at tipping point to break-up and now it looks like the first such deal could be around the corner, that being in the name of Deutsche Bank. Breaking the news in the New York Post earlier this year, The Edge Group – secretly known for their early predictions and intelligence on corporate break-ups and M&A around the world –said that we will see diversified banks spin-off their value trapped retail banking divisions in the next year through 2017.
"It's about predicting where trapped value exists to unlock it for new investors," commented Ryan Mendy, COO at The Edge Group. "The big investment bank model is over as we know it. Value Global banks on a SOTP basis, they are worth much more to investors if split-up and this misunderstood situation is creating a new event-driven opportunity for value investors," he continued.
Now Germany's embattled Deutsche Bank has a new CEO, John Cryan. Ahead of its 2020 strategy plan due for release next week, Cryan's given the marching orders several top executives, splitting the group's investment banking unit in two. The researched list of 12 names sees Goldman Sachs, HSBC, J.P. Morgan, UBS and even Credit Suisse to follow. The global advisor believes activism aside; the SEC and European Union's key regulators will force banks to separate their trading activities from their other operations. Many banks are making disposals to boost their leverage ratio [equity vs. total assets] to avoid critical stress test failure, but the likes of Deutsche still lags behind many peers.
Splitting Banks into transparent divisions could alleviate this problem by reducing both complexity and overall size. While the catalyst might be unique, The Edge stand by their experience and thesis that current conditions - global IT costs, political headwinds and strict regulations in particular - will continue to pressure banks to spin-off their retail divisions.
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SOURCE The Edge Consulting Group