1. The Banking Industry Chessboard
January 17,2013
Banking has improved materially since the crisis, and in this review we note that there was
not room for a single downgrade across the universe we follow. Several banks had good
growth in market value, outperforming similarly rated peers. The huge issue, though, is
that some of the major banks are rated by us as Takeover Targets – the so called “too big
to fail”. The way to realize value is to break them up. Will the Acquirers lead this process
or the shareholders and executives of the weaker giants themselves?
Many banks upgraded in our last review were upgraded. Spectacularly, HSBC jumped from
Management Change to Acquirer. UBS and Mizuho Financial also impressed, upgraded
from Acquisition Target to Performer.
Not on our list are two banks that we upgraded from Distressed to Takeover Targets:
Banco Popolare of Italy and Bankia of Spain.

2. Top Banks and their Current M&A Status
Management Acquisition
Acquirer Performer Change Target Distressed
HSBC Bank of China JP Morgan Chase Bank of Am erica SNS Reaal
Wells Fargo UBS Mitsubishi UFJ Citigroup FNMA
Royal Bank of Canada Mizuho Financial Goldm an Sachs Banco Santander Porter Bancorp
Westpac Banking Corp Nordea Lloyds Banking Group BNP Paribas Village Bank and Trust
ITAU Unibanco Skandinaviska Enskilda Banco Bilbao Vizcaya Royal Bank of Scotland Sparebanken Vest
Toronto-Dom inion Fifth Third Bancorp Sum itom o Mitsui Barclays
Banco Bradesco New York Com m unity Credit Suisse Deutsche Bank
Bank of Nova Scotia Huntington Capital One Morgan Stanley
Sberbank Rossii First Horizon National BONY Mellon ING Groep
Standard Chartered EverBank Financial DNB Societe Generale

3. Banks that materially improved
• HSBC Holdings PLC upgraded from Management Change to Performer. Despite a series of legal cases in the US and
EU, Stuart Gulliver, the CEO taking over from January 1, 2011 has been helped in shoring up the bank balance
sheet by global economic recovery and asset sales in Viet Nam, South America. Management changes did indeed
occur: Stuart Levey was appointed Chief Legal Officer, a key role in the current environment. Antonio Losada was
appointed Chief Executive - Latin America and Caribbean. John Flint was this month appointed Chief Executive -
Retail Banking and Wealth Management
• UBS AG upgraded from Acquisition Target to Performer. Sergio Ermotti was appointed Interim CEO on September
24, 2011, a position made permanent in November of the same year. Mr Axel Weber took over as Chairman in
2012. Being mired in legal issues as other major banks, Mr Ermotti has focused on expansion to China, appointing
Chi-Won Yoon as CEO Group Asia Pacific,and acquisitions, while riding the improving economic wave. Playing
offense is paying off in a big way. Team changes included appointing Lukas Gaehwiler as CEO of UBS Switzerland,
CEO of UBS Retail & Corporate. Andrea Orcel was appointed Co-CEO of UBS Investment Bank.
• Mizuho Financial upgraded from Takeover Target to Performer. Mizuho has settled with the SEC, and improving
rapidly, taking advantage of prior actions to build balance sheet. Four major management changes in 2012 is an
expression of the change at Mizuho: Junichi Nishizawa was appointed Executive Vice President, Human Resources
Group, and Internal Audit. Daisaku Abe was appointed Managing Executive Officer, IT & System Group, and
Business Group. Masaaki Kono was appointed Managing Executive Officer, Planning Group. Finally, Hideyuki
Takahashi was appointed Managing Executive Officer, Manager of Finance & Accounting Group.
• Nordea Bank AB upgraded from Management Change to Performer. Christian Clausen yesterday announced what
we suggested in our previous report: the appointemnt of a new CFO, an internal promotion of Torsten Hagen
Jorgensen. The bank has worked on improving its capital situation both on equity linked bond issue and other
equity issues in bank units.
• Skandinaviska Enskilda upgraded from Management Change to Performer. Annika Falkengren stuck to her team
and was helped by general market conditions in achieving the improvements leading to Performer status, doing
the right things.
• Fifth Third Bancorp upgraded from Management Change to Performer. The Board of Directors appointed Greg D.
Carmichael as President and Chief Operating Officer, in line with our rating. Whereas the CEO, Kevin T Kabat was
appointed to the additional role of Vice Chairman, the bank was clearly introducing a stronger hand in bank
operations after showing weakness.

4. Banks that materially improved
The following banks were all upgraded from Acquisition Target to Management Change. The clock is ticking on
management to effect change, but they have all gotten on track and will be granted time to deliver. The emphasis
is on change – you cannot stand still when your head is on the block.
• JP Morgan Chase & Co
• Mitsubishi UFJ
• Goldman Sachs Group Inc.
• Lloyds Banking Group
• Banco Bilbao Vizcaya
• Credit Suisse
• Bank of New York Mellon Corp
• DNB ASA

5. Trond Johannessen
Director
Phimark BV
+31 620 59 1015
trond@blackwolfbv.com