The Zacks Analyst Blog Highlights: Goldman Sachs Group, Bank of Montreal, Royal Bank of Scotland Group and Itaú Unibanco Holding
For Immediate Release
Chicago, IL – November 25, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Goldman Sachs Group, Inc. (GS-Free Report), Bank of Montreal (BMO-Free Report), Royal Bank of Scotland Group plc (RBS-Free Report) and Itaú Unibanco Holding S.A. (ITUB-Free Report).
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Here are highlights from Monday’s Analyst Blog:
Destination Europe: Alluring for Investment Banks?
Currently, many banks across the globe are eying the European continent as a lucrative destination. While duly noting a prolonged economic crisis, stringent regulations and various tax evasion issues, the huge amount of wealth amassed by the continent is attracting many global banking giants toward the region.
Europe Calling
The European continent is still, paradoxically, plagued by tepid economic growth and indebtedness. Moreover, there is serious rivalry among the domestic private banks. Hence, Europe would not seem an ideal business destination for the global banks. However, though the economic growth rate of this continent is lower than that of its Asian and U.S. counterparts, Europe’s strong wealth fundamentals make it an attractive target for global banking giants.
Per a “Wealth Report: Europe,” published by Zurich, Switzerland-based private bank Julius Baer, in 2013, private wealth in Europe reached an all-time high of 56 trillion euros and is expected to reach 80 trillion euros by 2019. Despite being entwined in a string of crises, the region was able to maintain its robust wealth position. In 2013, wealth in the continent increased by 1.7%, outpacing the earlier peak recorded before the 2007–2009 financial crisis. This huge wealth is luring banks to open or expand their European operations.
Banks in the Queue
Banks from U.S., Canada and South America are entering the European market. In July, the U.S. investment bank The Goldman Sachs Group, Inc. (GS-Free Report), in order to bolster its private banking business in Europe, set up its European lending unit to cater to the needs of rich clients. In May, Canada’s Bank of Montreal (BMO-Free Report) closed the acquisition of London-based F&C Asset Management in a £700m deal so as to strengthen its UK and European footprint.
In July, South American investment bank Grupo BTG Pactual reached a $1.7 billion deal to buy the Swiss private-banking unit of Assicurazioni Generali SpA. Given the huge prospects for European private banking business, we expect more investment banking giants to follow suit.
Cost of Wealth
Per the report, around two-third of total net European wealth are concentrated over economically developed countries like Germany, United Kingdom, France and Italy. However, the financial crisis had led to a huge erosion of wealth in countries like Spain and Greece. Wealth, worth around 1.4 trillion euros, has been eroded in Spain since 2007. Concerns have been raised about this growing disparity of wealth in the continent. Per the report, one-tenth of the households in the continent possess over 50% of the total wealth.
Though the fundamentally strong wealth position of the continent will aid in global private banking business, it is necessary that the policy makers take the wealth and income inequality aspect seriously to avert any crisis.
Currently, Goldman Sachs holds a Zacks Rank #2 (Buy), whereas Bank of Montreal carries a Zacks Rank #3 (Hold). Two other top bank stocks include The Royal Bank of Scotland Group plc (RBS-Free Report) and Itaú Unibanco Holding S.A. (ITUB-Free Report). While Royal Bank of Scotland sports a Zacks Rank #1 (Strong Buy), Itaú Unibanco holds a Zacks Rank #2 (Buy).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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