UBS, which three years ago was beset by massive credit market losses and about to be embroiled in a major tax evasion case in the US, is now singled out by Morgan Stanley as one of its top stock picks for financials.

“UBS is taking solid steps to return to long-term value generation through structuring of its investment bank and return to inflows in the private bank; we have seen evidence of bottom-up turnaround in private banking, early wins on efficiency and regrouping in trading businesses as a result,” said Morgan Stanley analysts in a note.

On HSBC Morgan Stanley is bullish due to the banking group’s strong Asia franchise, a key benefit as the Asia-Pacific region continues to grow. “It is better placed than other large Asian peers on deposits and capital…which we think will help it gather momentum and gain market share”, analysts said.

On the other side of the ledger, Morgan Stanley’s “least preferred” banks are Akbank, the Turkish bank; Banco Popolare; Banca Popolare di Milano; Natixis; Lloyds Banking Group and Raiffeisen.

In the case of Lloyds, which is now part-owned by the UK taxpayer after a bailout in 2008, Morgan Stanley said the bank faced the major task of shrinking its balance sheet and breaking free of state ownership.