In unrelated incident, fire damages Renens train station and bikes
LAUSANNE, SWITZERLAND – Vandals have damaged the high-tech Hydroptère experimental “flying boat” moored in Morges, causing as yet uncalculated damages, says Vaud police.
And in a separate incident, which may have been an accident, a fire has damaged the roof of the east side of the Renens train station and a number of motorbikes and mopeds parked outside.
The fire occurred late Monday 21 May. A passerby alerted the fire department that the area where bikes are parked to the east of the station was on fire, at 23:15. The roof of the building was destroyed as far over as the underground pedestrian path.
Hydroptere in water for two weeks, was on “orange alert” for new Lake Geneva speed test
The experimental catamaran, being developed in collaboration with EPFL in Lausanne, suffered at least CHF10-20,000 in damages during the night of Sunday to Monday, and it appears that the attack may have been more than random vandalism. Some 80 screws were unscrewed, toppling the masts, and the inside, which houses highly confidential technology, was “visited”.
The incident occurred just four days before the group was to present its “Hydros” project publicly. The group says there is at least suspicion that the vandalism was designed to look like negligance.
Bright news is that 2013 should be better
Swiss Alps, winter 2012
BERN, SWITZERLAND – Glum news out of Bern for the Swiss tourism industry Tuesday 22 May won’t surprise anyone: the strong franc and weak euro are hurting the tourism industry this year. The latest forecast for the summer season is a drop of 1.7 percent overall, but 3.4 percent for tourists from abroad.
Two factors that are saving the situation somewhat are strong demand at home, with the Swiss visiting their own country, and continuing strong demand from Asia. Seco, the economics ministry, notes that while strong demand from Asia’s emerging economies helps, they remain too small a share of overall tourism to make up for significant losses from neighbours France, Italy and Germany.
The glum outlook follows a morose winter season, down 3.4 percent compared to the previous year, but with Swiss resorts showing a 6 percent drop despite wonderful snowfalls, due to poor weather in December followed by bitter cold in February.
The forecast for 2013 is brighter, expected to rise 1 percent with a 2.7 percent for 2014.
Consumers see inflation as stronger and expect it to increase in next 12 months
BERN, SWITZERLAND – Swiss consumer confidence is rising, with the quarterly index of Seco, the State Secretariat for Economic Affairs showing a marked increase in two key areas. The survey carried out at the end of April shows that “consumer expectations regarding the development of the overall economic situation reached -2 points in April (compared with -29 in January). There was also an improvement in the expectations concerning unemployment (+49 in April com-pared with +71 in January),” according to a statement from Seco.
The two areas that remain virtually unchanged, however, are assessments of the future development of consumers’ personal financial situations (+0 in April compared with +1 point in January) and “the assessment of their future savings opportunities (+20 compared with +22 points in January)”.
A number of changes are taking place in the way the survey is carried out, starting with a change in the research institute doing the research, but it will also cover an additional two to three weeks and will include 1,200 rather than 1,100 households. A key change is that Italian speakers from Ticino are now being inclluded; in the past the surveys were run only in French- and German-speaking Switzerland.
Bumpy weather for the airline industry means job cuts to engine maintenance crews in Basel
BASEL, SWITZERLAND – Lufthansa Technik, a subsidiary of the parent of Swiss, the airline, is going on a strict died, restructuring to focus on just one product. The company will cut 82 of its 302-person workforce as a result. The move comes as a result of the high franc and tough airline market conditions, the company said Tuesday 15 May in a statement.
Lufthansa said earlier this month that cost cutting would involve 3,500 jobs worldwide in coming months, due to market conditions.
Lufthansa Technik “will concentrate exclusively on line maintenance, light base maintenance and logistics services for its customers at EuroAirport Basel” it says, and it will discontinue “The labor-intensive technical maintenance of VIP aircraft and the Component Services and Engine Services business will all be discontinued” due to under-utilization, with some job cuts coming before the end of this month.
“The demand for maintenance of regional aircraft and their engines had declined dramatically, and the company was unable to compensate for these disproportionate losses in capacity utilization through its business in the maintenance of VIP and executive jets,” it says.
The company has negotiated with Swiss a deal that may involve 22 staff keeping their jobs, with the Swiss fleet’s engines continuing to be maintained at the engine shop in Basel. The staff would not be working as employees of Lufthansa Technik, however.
Two big auction houses realize Monday sales of more than $40 million, more to come
Tiara on sale at Sotheby's in Geneva 15 May
GENEVA, SWITZERLAND – The Swiss franc is a pale safe haven in these days of troubled economies, compared to the bright, shining market in fine jewels, if Geneva auctions are any indication.
Monday was a big day, with Sotheby’s succeeding in the afternoon in a “white glove” (all lots sold) sale of 60 pieces of jewelry by designer Suzanne Belperron for CHF3.4 milliion ($3.2m), triple the pre-sale estimate.
The top item was a 1935 rock crystal and diamond ring that went for half a million dollars.
Christie’s in the evening held Lily Safra’s Jewels for Hope charity sale, which made CHF35m ($37.9m), almost double the pre-sale estimate.
The biggest ticket item was a ruby and diamond ring, the Hope Ruby, a cushion-shaped Burmese ruby ring of 32.08 cts, by Chaumet. Amer Radwan of Dubai’s Radwan Diamond and Jewelry Trading, paid CHF6.2 million for the gem, setting a world record for the per carat price for a ruby.
Christie’s holds its regular spring jewelry sale Wednesday 16 May and Sotheby’s continues its two-day sale Tuesday, with a lineup of historically significant jewels that include the Beau Sancy diamond, (estimate, CHF1.85-3.6m / $2-4m), the Murat Tiara (CHF1.4-2.3m) and a diamond brooch set with a 7.33 carat Fancy deep yellow diamond that was offered to the Corsini family by Charles Edward Stuart (1720-1788), Bonnie Prince Charlie (CHF 280,000-480,000).
Arab spring played a role
Numbers are impressive but it’s the criminal tales that are gripping
Growth in reporting of suspicious financial activity shows significant jump
BERN, SWITZERLAND – Switzerland saw a 40 percent increase in 2011 in the number of suspicious activities reports (Sars) to MROS, the Money Laundering Reporting Office Switzerland, the federal office shows in its annual report published Monday 14 May.
Banks and other financial groups, required by law to report suspicious activity, filed 1,625 Sars in 2011. Of these, 91 percent were forwarded after “careful analysis” to judicial authorities, federal or cantonal, for prosecution. The total asset value was more than CHF3 billion, greater than the combined value of Sars from 2009 and 2010 and a record figure.
“In 2011, 1,625 SARs generated a total asset value of just under CHF 3.3 billion (2010: CHF850 million from 1,159 SARs),” the report notes.
Two-thirds of the reports were triggered by media reports (30 percent of information sources) combined with third party information and information from prosecuting attorneys, which “show(s) that financial intermediaries use modern resources and consult external sources in order to gather information for their inquiries, which is then evaluated and condensed into a considerable number of Sars sent to MROS”, the report indicates.
Seven cases of bribery had total assets of CHF791 million each
The huge increase underscores the continuing progress made against money laundering in Switzerland over the past 10 years but it also provides a window to some significant shifts in money laundering globally. The average asset value in 2011 was approximately CHF2 million, compared to CHF731,000 a year earlier. The sudden jump shows a small number of cases, notably bribery in the Middle East and in particular in Egypt, that involve much larger sums than the cases in 2010. Seven cases of bribery had total assets valued at CHF791m each.
Four cases of online gaming had a total assets value of CHF560m each.
Eight cases had a total asset value of nearly CHF200m each, while in 2010 none of the reported cases had a total assets value over CHF100m.
Types of crimes reported are shifting
Fraud remains the largest group of crimes reported, but the numbers are down slightly due to a change in reporting. Computer fraud, mainly phishing, has been retroactively put into a category of its own starting with 2007. MROS says the report “shows that ‘phishing’ remains a topical subject and that financial intermediaries consistently report the account details of financial agents or ‘money mules’ to MROS”.
A second group, money laundering, consists of activities that are not technically money laundering crimes “despite the fact that the modus operandi suggested acts of money laundering. The increase is due not only to one reported case involving numerous business connections, but also to the general increase in the number of SARs in 2011.”
The drugs category consists of reports linked to “the street sale of drugs by nationals of sub-Saharan African states and the financial transactions associated therewith (money exchange, money transmitting)”.
Lily Safra's jewels on auction 14 May include this pair of 19.43 and 19.16 carat pear-shaped diamond ear clips (photo: Christies)
GENEVA, SWITZERLAND – Some CHF20 million in jewels will be auctioned for charity by Christies Monday night 14 May, in a sale called “Jewels for Hope” at the Hotel des Bergues in Geneva. The collection is owned by Lily Safra, one of Geneva’s most famous philanthropists along with her late husband, banker Edmond Safra, who died in a fire in 1999, a case of arson for which his bodyguard was imprisoned.
Lily Safra has headed the Safra Foundation since 2000; it provides financial support for projects in a number of fields, including religion, cultural and humanitarian relief.
Edmond Safra was her fourth husband; they were married for 20 years. He was estimated to have a fortune worth $2.5 billion in the early 1990s, amassed during his 40-year career as a financier. He founded the Trade Development Bank in Geneva and Republic National Bank of New York.
The proceeds from the sale will benefit 20 charities supported by the Safra Foundation.
JAR diamond and ruby brooch, estimated value $1.25-1.5 million, to be auctioned Monday night at Christies sale in Geneva
The collection shows a wide range of design work, from a 1911 diamond lavaliere necklace by Cartier, estimated value CHF200-400,000, to 18 pieces designed for Lily Safra by contemporary jeweler Joel Rosenthal (JAR), the largest single-owner collection of his work seen at an auction.
The star of the JAR pieces is a ruby and diamond Camellia flower brooch created in 2003 and estimated at $1.2-1.5 million.
But diamonds are likely to bring in the highest bids, with two rings each expected to fetch at least $3 million: “The 34.05 carat rectangular-cut diamond ring (D/VVS1 potentially flawless, Type IIa) is a perfect stone estimated at $3.6-5 million” according to Christies.
“Formerly in the collection of Luz Mila Patiño, Countess du Boisrouvray, the famous 32.08 carats cushion-shaped Burmese ruby and diamond ring by Chaumet is offered with an estimate of $3-5 million.” A pair of diamond pearl-shaped clip earrings are estimated in the same price range.
Christies is holding its regular spring fine jewelry auction Wednesday 16 May in Geneva.
Ed. note: the Safra jewels are on display at the Hotel des Bergues until 18:00 this evening.
BERN, SWITZERLAND – The Swiss federal government says the fight against black market labour is showing results, thanks to strong support from the cantons. Inspectors carried out 1,130 checks of companies and checked 33,866 individuals in 2011, a slight drop, according to Bern’s figures, but the government says cantons carried out more in-depth investigations last year.
The law against black market labour is now in its fourth year and the Department of the Economy is preparing a report for the end of the year with long-term recommendations.
ZURICH, SWITZERLAND – Insurance company Zurich Thursday 10 May reports a 78 percent increase (dollars) in net income attributable to shareholders for the quarter ending 31 March, compared to a year earlier. The company’s business operating profit was $1.4 billion and net income after tax was $1.1b.
The “strong performance”, as Zurich qualified the quarter’s results, were due in part to a lower level of major catastrophe and other large losses, compared to early 2011. All parts of the business saw growth, although weather-related events led to reduced profit from the reinsurance operations.
BERN, SWITZERLAND – Women in the US celebrated Equal Pay Day 17 April, six weeks after their Swiss counterparts, Megan Beyer, chair of the US-Swiss Sister Republics – Building Bridges conference says in a mailing to the group. The group of women leaders from the two countries who met in Bern and Geneva 7 March marked the day when Swiss women finally earned the same amount men earned the previous year.
“Comparing a simple thing like the differing dates of Equal Pay Day brings into a sharper focus the issue of where both of our countries stand on this road to gender equality,” writes Beyer. “That is the beauty of this bi-lateral project. By comparing our two countries, we come to understand our own nation better.
By March 7th, women in Switzerland had finally earned the same amount men had earned the previous year. In America, women still needed to work another six weeks to match the earnings of their male counterparts. It is no wonder the World Economic Forum Global Gender Gap Index puts America at 17 and Switzerland at 10.”
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Sister Republics - Building Bridges conference in Bern in March: women leaders from US, Switzerland (photo: Annabelle Magazine)
Beyer, whose husband is the US ambassador to Switzerland, Donald Beyer, points to new steps being taken in both countries to address the problem of pay discrimination and inequity. The US government has created new apps “that offer salary data which add transparency and give women a distinct advantage in salary negotiation.” The White House recently released a report, Keeping America’s Women Moving Forward, The Key to an Economy Built to Last, on “policies, programmes and legislative initiatives under the Obama Administration that are supporting women and girls at all stages of their lives.”
Swiss voters could well find that they are voting on corporate equal pay quotas, with Lisa Feldman of Annabelle Magazine and Sandra Jean of Le Matin establishing a task force on quota legislation to collect signatures for a popular initiative that would put the issue on the ballot in Switzerland.
A “call to action” by the Swiss chapter of Corporate Women Directors will be the focus of a meeting this summer to review several initiatives to get more women on Swiss boards. Co-founder of the group, KPMG, noted in 2011 that “A recently published study by Heidrick & Struggles on corporate governance at major European corporations shows that Swiss companies, where women comprise 11 percent of boards of directors, still have a lot of catching up to do. Whilst only marginally short of the European average of 12 percent, they are still far behind the leaders Norway (33 percent), Sweden (29 percent) and Finland (25 percent).”
The conference targeted five areas as the focus for bi-lateral efforts:
- Raising awareness and communicating the message that we need more mentoring and sponsoring to get the next generation of women into leadership positions
- Defining standard elements of certification programs such as: salary, recruitment and promotion, training, and flexible wor
- Providing more affordable quality child care options for working mothers
- Promoting flexible work models by changing the corporate culture to accept pay for function instead of pay for hours
- Encouraging women to be strategic in building relation- ships both inside and outside the workplace.
GENEVA, SWITZERLAND – International financial markets fell sharply Monday 7 May after weekend French and Greek national elections showed voters calling for change. Markets reacted with renewed concern over Europe’s ability to deal with its debt crisis.
Financial media, including the Financial Times and The Guardian, have underscored investors’ worries about how the new French Socialist president will work with Germany, which opposes funding growth with more debt.
Asian stock markets slid, reacting also to the release of disappointing US labour data. Tokyo’s Nikkei 225 index closed down 2.6 percent to 9,134.26 and Hong Kong’s Hang Seng dropped 2.4 percent to 20,582.24.
In Europe, major stock markets fell sharply in the morning, then recovered. France’s CAC 40 lost 1.9 percent in early trading to settle at a gain of 1.03 percent at closing time, while Germany’s DAX index was down by as much as 2.7 percent during the day but closed down only 0.2 percent.
Markets in London were closed for a bank holiday.
Currency, bond markets also reflecting uncertainty
The Greek stock exchange suffered from the political stalemate left from Sunday’s elections, with the Athens Stock Exchange Index, ASE, down 6.7 percent. Greek voters shunned the centrist governing parties responsible for austerity measures which have been adopted to avoid a national default. Although extreme left- and right-wing parties saw important gains, no single party achieved an absolute majority, and the country faces the possibility of a second round of voting and prolonged uncertainty.
Currency markets were also jittery.
The euro hit a three and a half year low against the pound and a three month low against the dollar, dipping under the $1.30 level.
Yields on government bonds were mixed, with the 10-year French bond decreasing to 2.8 percent and the 10-year German bond rising to 1.6 percent. The yield on Greek debt rose even further with the 10-year government bond there reaching 23.30 percent.
GENEVA, SWITZERLAND – Swiss unemployment continued its downward slide in April, down to 3.1 percent from 3.2 percent in March and the 3.4 percent seen in January, the Secretariat for the Economy, Seco, reported Monday 7 May.
Geneva’s unemployment rate, the highest amongst all Swiss cantons, was at 5.2 percent in April, slightly down from 5.3 percent of the working force in March. The highest rates of unemployment continue to be in French-speaking cantons, most notably in western and southern Switzerland.
More people were out of work in the banking sector, where unemployment increased 1.4 percent from March, 7.9 percent since April 2012.
For the same month, Swiss consumer prices saw an increase of 0.1 percent, mainly due to higher prices for petrol, air transport and summer clothes. Over the past 12 months, consumer prices for domestic products remained unchanged, whilst imported goods cost consumers 3.6 percent less.
GENEVA, SWITZERLAND – Pictet et Cie in Geneva, one of the country’s largest wealth and asset management banks, hit back hard Sunday night 6 May after two Swiss newspapers, in their print editions, claimed the bank is being targeted by the US Justice Department. Eleven other Swiss banks are under investigation by the US government for allegedly helping US-based American clients hide their money from the taxman in Swiss bank accounts. The Pictet case is different, dating back to one specific incident related to an external asset manager for whom the bank managed funds; the bank says it reported fully on the affair in 2010 under the terms of the Swiss-US treaty covering requests for judicial assistance.
Bloomberg reports that “The company ‘vigorously’ rebuts any allegation it is being targeted by U.S. tax authorities, including the Internal Revenue Service, Pictet said in an e-mailed statement today. “Pictet confirms that no accusation has been levelled against it by the U.S. authorities, including the IRS,” information confirmed by Reuters.
In other banking news Patrick Odier, president of the Swiss Bankers Association told RTS public television that Switzerland needs the new tax deal negotiated with Germany to make it through that country’s parliament, for Switzerland as a financial centre to development and jobs to be saved.
Online database will help researchers, government planners prepare for natural disasters
BERN, SWITZERLAND – The Swiss national weather service, MeteoSwiss, and the University of Bern have brought online more than 125,000 historical data on weather, climate and natural disasters housed in a database called Euro-Climhist, the first such DB, unique in the world, according to Bern. Euro-Climhist is designed to become a European-wide database. It was presented 3 May in Bern.
The Centre Oeschger at the university with support from the Swiss GCOS (Global Climate Observing System) Office has been gathering a wealth of information from sources such as public and private chronicles, books kept by public institutions such as hospitals that date back to the Middle Ages.
The result is a database that covers 1550-1864, when Switzerland began official weather recordings.
The centre “has been working intensely in recent years to systematically collect the data, run quality control checks and safeguard digitally these documents,” says MeteoSwiss points out in a press release.
Floods such as those in 2005 that caused CHF3 billion in damage provide information that, compared to similar disasters in the past, can help governments plan to better protect their populations, but such data can also be useful in evaluating the safety of nuclear power plants. Risk experts, climatology researchers but also insurance companies calculate risks based on the long-term picture of the frequency of extreme natural disasters.
Accurate and regular reporting of data became accessible only with the arrival of measuring instruments in the second half of the 19th century
Rega's 3 air ambulance jets were used in March to repatriate injured children home to Belgium after a horrific bus crash in Sierre
BERN, SWITZERLAND – The issue of Swiss neutrality is raising its head in parliament with the confirmation by Rega that it has carried out repatriation flights of wounded US soldiers from Afghanistan and Iraq, reports RTS public broadcasting.
Rega, which provides emergency medical repatriation flights for a number of clients, notably insurance companies, confirmed the information in response to a 2 May article in Handelszeitung that says the private company has run 17 flights.
Last month Rega celebrated its 60th anniversary, noting that 2011 was a record year in terms of the number of rescue missions, more than 14,000.
Rega has not confirmed any details except to say it has delivered wounded soldiers to the Ramstein air base in Germany and that it has not worked directly for the US armed forces. According to RTS the company says it makes 150 foreign repatriations a year out of 700 total, and fewer than 20 involve soldiers. Rega says it makes no distinction about the side soldiers are fighting on, in line with Swiss neutrality and International Red Cross principles.
The company takes on work outside its main Swiss emergency medical air evacuations in Switzerland mainly outside the tourist season, when its planes and helicopters are not in full use.
The issue comes at a sensitive time for Rega, whose supporters have a bill coming up in parliament to exonerate the non-profit group from paying TVA (value added tax). It was hit in 2010 with a CHF5 million bill for taxes, when the tax office decided its annual dues for members were a form of insurance.
LAUSANNE, SWITZERLAND – Nespresso will create 400 jobs in Switzerland when it opens a third production centre for Nespresso capsules, the company announced Thursday 3 May in a press release. The Nestle subsidiary now employs 7,000 people worldwide; 2,000 of them are in Switzerland.
The CHF300 million project should be completed and operational in early 2015.
The new factory will be in Romont, canton Fribourg. The two existing ones are in Orbe and Avenches, both in canton Vaud.
Nespresso in 2011 had turnover of CHF3.5 billion, with 20 percent growth.
Investors see the silver lining in UBS’s gray cloud
Smartphones: sales up, but less messaging hurts Swisscom revenue as people use more apps, social networking
ZURICH, SWITZERLAND – Switzerland’s largest bank, UBS, turned in a glum first quarter financial report 2 May, showing a net profit of CHF828 million, down by 54 percent compared to the same period a year earlier. An accounting charge led to a loss at the investment bank: the value of UBS debt has risen, making it more expensive for the bank to buy back its own bonds. Bloomberg points out that “Chief Executive Officer Sergio Ermotti is shrinking UBS’s investment bank by almost half as stricter capital requirements and Europe’s sovereign-debt crisis hurt profits”, noting that Ermotti has called 2012 a year of transition for the investment bank arm of UBS.
Investors were not unhappy, however, with shares in the bank rising 6 percent in morning trading after the results were announced, reports Reuters.
The Financial Times reports that “the Swiss group issued an uncharacteristically upbeat forecast, emphasizing its ability to attract new money to its core private bank while shedding risk-weighted assets and boosting capital ratios”, while nevertheless cautioning that progress will be difficult until progress is made resolving the US federal budget problems and the eurozone debt crisis.
Social networks cut Swisscom revenue from messaging
Swisscom‘s net revenue slipped by 2 percent to CHF2.08 million in the first quarter, but it issued an update statement and pointed out that “capital expenditure in Swiss infrastructure increased by 24.1 percent to CHF 366 million. Swisscom is investing heavily in broadband network expansion throughout the country in order to further boost competitiveness. Headcount in Switzerland increased by 294 FTEs as a result of company acquisitions, network expansion and growth in customer services.”
An area hit hard was revenue from mobile phone messaging, down 28 percent to CHF59 million, which the company attributes to growing up of IP-based applications and social media. “Average revenue per mobile user per month (ARPU) declined by 4.3 percent to CHF 44.” Swisscom’s statement shows, despite good growth in the number of mobile access lines in Switzerland, up by 221,000, a 3.8 percent increase, and sales of 328,000 mobile devices, up 1.9 percent.
Smartphones accounted for 67 percent of mobile phone sales.
Canadians had own investigation, but Swiss reportedly asked for help over money laundering and corruption
ZURICH, SWITZERLAND – Riadh Ben Aissa was arrested in Switzerland sometime in the past few days, but it’s not yet clear what charges are faced by the former head of global construction SNC-Lavalin, a large Canadian company. The company has been in Canadian headlines for weeks over a scandal involving missing millions.
The Globe & Mail refers to Ben Aissa as Canada’s most mysterious businessman. It says it was told by Jacquelin Buhlmann, a spokeswoman for the Swiss Public Attorney’s Office that Switzerland in April asked Canada for assistance in its year-long investigation into possible money laundering, corruption and fraud. About that time, says the Canadian newspaper, Canadian police raided the offices of SNC.
“Ben Aissa was forced out of the Montreal-based company in February amid allegations he made $56-million in improper payments to unknown commercial agents,” reports the Globe & Mail. “The company has said it has no idea where the money went. Mr. Ben Aissa has denied any wrongdoing. A source familiar with the company’s investigation has said some of the payments went through banks in Switzerland and the Middle East.”
He had close ties to the two Qaddafi sons, Saadi and Saif, the Toronto Star reports. Their assets in Switzerland have been blocked since before the overthrow of their father’s regime.
The company’s major projects in Libya included, according to RTS, the Benghazi airport, the Gharyan prison and an artificial river that runs through the desert.
RTS notes that SNC has said it will cooperate fully with the Swiss investigation.
Foreign workers make up a significant part of the seasonal construction industry in Switzerland
BERN, SWITZERLAND – A record 27,000 foreign workers’ salaries and working conditions in Switzerland were checked in 2011 for suspicion of abuse, in particular for underpayment. The number of short-term labourers (three month contracts) brought into Switzerland rose, which accounts in part for the increase in suspected cases of labour force abuse.
Traditionally, about half of those checked are sanctioned and while the others may not found to be abusive once investigated, a number are considered minor infractions and the company is allowed to simply pay its workers what is owed without being sanctioned.
Three groups investigate companies that are suspected of salary abuse. The cantons checked 7,200 Swiss companies with foreign employees and 7,000 foreign firms. Organizations that work with companies with collective contracts checked 11,000 foreign companies and 7,500 Swiss companies. And 5,600 self-employed workers had their status checked to ensure they were working legitimately, and about 10 percent of these were found to be “fictive”, says Bern.
Companies with collective contracts less often under suspicion
Companies with collective contracts saw the number of their cases slip to 9 percent for Swiss companies and 14 percent for foreign companies. But the figures were much higher for other firms: 35 percent of foreign companies were suspected of underpaying workers and 26 percent of Swiss companies, although the latter fell from 41 percent the previous year.
The investigations lead last year to salary adjustments and fines paid in 80 percent of cases for foreign companies and 70 percent for Swiss ones. Seco, the economy ministry, notes in its report that the presence of work inspectors is clearly effective and important to avoid labour market abuses.
LAUSANNE, SWITZERLAND – Greater transparency in the commodities industry and improved dialogue with the public and regulators would benefit all stakeholders, says Alexander Karrer, deputy secretary at the State Secretariat for International Finance (SIF).
Karrer was speaking at an international conference on commodities in Lausanne 25 April.
He encouraged people in the commodities business “to ensure that the public knows what they are doing, and how and why they are doing what they are doing”. Karrer was referring to the impact of commodity price fluctuations on developing economies as well as social and environmental issues in politically unstable countries where many of the commodities originate.
Karrer says that “people working in developing countries [are] particularly vulnerable” due to the absence of standardized environmental and social legislation in many countries which supply the natural resources.
The contribution of commodities trading to the Swiss GDP (gross domestic product) is the equivalent of that of tourism: for 2010, the KOF Swiss Economic Institute estimates the figure to be around CHF17 billion, more than three percent of GDP.
Karrer told his audience that “while we are pleased [to have] your companies operating in Switzerland, you have to be aware of your role in the global economy, which means stable growth and development”.
The Swiss government, he said, is pushing for greater financial integrity, given the risk of corruption and money laundering from funds originating from trades.
LAUSANNE, SWITZERLAND – China’s renminbi, which Beijing has begun cautiously promoting as an internationally accepted trading currency, may surprise us, HSBC’s global head of commodity and structured trade finance told a Financial Times conference in Lausanne Wednesday 25 April.
Jean-François Lambert said that ”It’s a huge development and moving faster than many expected, so pay attention”. He noted that the US dollar continues to be the predominant currency for commodities trades despite its recent weakness, but the banker alerted delegates to China’s shifting stance on the renminbi during as the conference focused on China’s role as a global economic powerhouse.
Richard Elman, chairman of Noble Group, believes that the rate of spending on commodities, which in turn effects economic growth, will slow in China. Personal savings in the country’s “one-child” society will be held for old-age spending, and growing commodity costs burdened by expensive investments in infrastructure will reduce spending.
Elman says that energy consumption will decrease as China’s energy use becomes more efficient.
He expects the renminbi to become an international currency in 10 to 20 years. Elman notes that China, the world’s second largest economy, has begun to internationalize the renminbi through bilateral agreements, for its use in international trade and lending.
The Singapore-based Noble Group claims to be “Asia’s largest diversified commodities trading company”.
Credit Suisse, Paradeplatz, Zurich
ZURICH, SWITZERLAND – Credit Suisse showed a first quarter 2012 return to positive net income, Switzerland’s second largest bank said Wednesday 25 April. The results were announced before markets opened.
Chief executive Brady Dougan said in a statement that the bank had a good start to 2012, and the figures were indeed better than analysts’ predictions of a loss.
The net income of CHF44 million was an improvement: Credit Suissse in the fourth quarter of 2011 suffered its first net loss since 2008.
But the figures were far off the CHF1.14b reported in Q1 2011, until “normalized” figures are compared, showing the bank with income of CHF1.35b. Normalized figures don’t include writedowns o f$1.6b that reflect the bank’s cost-cutting programme, with restructuring and bonus cuts.
Dougan’s salary was cut in half in March 2012.
“We began to see the effects from the measures we announced in mid-2011 to evolve our business model and cost structure and we benefited from an improved market environment, Dougan says. “Our reported results were adversely impacted by accounting driven fair value losses due to tightening of our own credit spreads.”
Panel at FT Lausanne commodities conference predicts continuing high oil prices
LAUSANNE, SWITZERLAND – The United States is where the world’s next economic and industrial boom may occur, says Daniel Jaeggi, co-founder of Geneva-based energy trading firm Mercuria.
Jaeggi was speaking at a two-day commodities conference in Lausanne 24 April. His privately held firm trades approximately one million barrels of crude oil a day. Jaeggi encouraged investors to look at the US for the start of a new “industrial renaissance” driven by factors including the cheapest energy resources, such as oil, gas and coal, cheap and flexible labour, and a “positive population dynamic, which certainly cannot be said for Europe”.
“We have had the BRIC story since 2001, and by now you would’ve had to have been asleep for the past decade not to know what BRIC stands for”, he told GenevaLunch, referring to rapidly developing economies Brazil, Russia, India and China. “Some tectonic plates are shifting and certain things are changing. The story of the West is that the industrial manufacturing base disappearing from the West has been going on since the 1970s. You can now ask yourself seriously if we are not at the dawn of something very significant.”
Europe’s outlook negative, oil prices to remain high, say traders
A panel of energy trading executives generally agreed on a negative economic forecast for Europe at the Financial Times conference. The panel: Glencore chief of oil Alex Beard, Pierre Barbé, president at Total Oil Trading and Törbjörn Törnqvist, chairman of Gunvor.
Top oil traders handed consumers gloomy news, telling the conference that three-digit prices for oil are here to stay. The price of Brent oil, the benchmark crude, by April had remained above $100 a barrel for a record 200 consecutive days. And oil traders don’t see it slipping, thanks to growing demand and continuing tight supplies.
Ten years ago the price of Brent was $20 a barrel.
The US Department of Energy, in a 2011 report called “What drives the price of crude oil” includes the activities of the financial markets in its seven key factors.
Novartis sales down, Syngenta berated by Bern Declaration
GENEVA, SWITZERLAND – Merck-Serono in Geneva announced Tuesday 24 April that it is closing its head office in Geneva and moving other Swiss-based operations to Darmstadt, Germany. The “transformation programme” will involve cutting 500 jobs and transferring another 750, mainly to Germany, where Darmstadt will become the company’s European hub, and to Boston, USA and Beijing, China.
“Merck’s transformation program is focused on addressing unprecedented market shifts, increasing competition in key product areas and existing inefficiencies in its own organization,” the company notes in a press release. It provided details on its future Swiss operations and the job transfers, some of which will involve moves from Geneva to Aubonne, in canton Vaud.
“Merck Serono will maintain a manufacturing presence in Switzerland and will continue to manufacture biotech products in its state-of-the-art biotech production sites in Aubonne and Corsier-sur-Vevey (both in the Canton of Vaud). However, Merck also plans to reduce approximately 80 positions across the three production sites in Aubonne, Corsier-sur-Vevey and Coinsins. The division’s existing manufacturing operations in Coinsins are planned to be relocated primarily to the Aubonne site. Out of the 750 positions planned to be transferred, Merck Serono intends to relocate over 130 positions related to technical manufacturing operations from Geneva to the Aubonne area in the Canton of Vaud in order to be close to its manufacturing activities. Merck intends to maintain its Swiss market operations in Zug.”
The company has 17,000 employees worldwide, including 1,250 in Geneva, one of two European head offices.
Novartis sales down 8 percent
Novartis also handed out bad news Tuesday in its quarterly financial report, saying net income fell from $3.37 billion in Q1 2011 to $3.09b, an 8 percent drop. Net sales fell by 1 percent to $13.74b.
The news comes just a day after the company announced it is launching new projects that will increase its presence in Switzerland, in Stein, near Zurich.
Syngenta‘s AGM: the annual general meeting of the plant industry company based in Basel went smoothly according to the company’s press release, which did not mention pre-AGM pressure and heated debate over its pesticide Paraquat’s use in developing countries. Ethos, a group of 130 institutional investors, and Actares, a group of shareholders focused on sustainable development, recommended to shareholders not to let the board or management off the hook over “irresponsible selling” of the pesticide, saying it is responsible for a number of cases of poisoning, reports the Bern Declaration.
Banque Pictet published a critical report (pdf) just days before the meeting, about the dialogue with Syngenta, demanding that the group rethink its strategy for the product.
Five months ago the company was cutting jobs; today it is expanding its Swiss base
BASEL / GENEVA, SWITZERLAND – Novartis is pumping CHF500 million into a new plant in Stein, canton Aargau, near Zurich, to replace an older one with a state of the art production facility. Stein will become a platform for launching new pharmaceutical products, the company said Monday 23 April.
The news was presented in the context of Novartis’s commitment to Switzerland, with the company underscoring other projects, such as one in Basel, to expand the size of its workforce in the country. The pharma company has been under heavy pressure since it announced in January that it would cut jobs in Basel and closing its over-the-counter unit in Prangins, next to Nyon. Intensive talks led to a turn-around, with the company announcing 17 January a long-term solution appeared possible that would allow the centre to remain open.
Source: United Coffee in Geneva
GENEVA, SWITZERLAND – UCC, the leader of Japan’s coffee market, is buying one of Europe’s largest independent coffee suppliers, United Coffee of Geneva. The price of the sale is 50 billion yen ($617 million), reports Bloomberg, which says the move “enables UCC to enter Europe for the first time and will bring the company’s sales from overseas markets to about 20 percent from 3 percent.”
The sale is expected to be finalized in the second half of 2012, says UCC in a mailed press release.The sale is being handled through the CapVest private equity fund.
The new company will be the fifth largest in the world. UCC is a family company, remaining in the hands of the founding family, with 3,700 employees and turnover of euros 2.6 billion. It recently decided to re-centre its activities on the coffee industry to become a world-scale player. It was the first Japanese company to adopt integrated production, from plantation to finished product. It has coffee plantations in Hawaii and Jamaica and is one of the largest suppliers to consumers and the restaurant industry.
United Coffee was founded in 1818 and it describes itself as “one of Europe’s largest coffee roasters, producing and distributing a wide range of coffee, coffee machines and related services through retail and out-of-home distribution channels, which includes hotels, restaurants and cafés.”
United Coffee moved to Geneva in July 2010. It is one of the companies that has taken up the war against food giant Nestle, which is protecting its coffee capsule business with a fleet of patents, backed by lawsuits.
Background: “Unlocking a Captive Market: The Battle to Unseat the Nespresso“, Wharton University, June 2011
Nestle in Vevey
LAUSANNE, SWITZERLAND – Nestlé is having a good week: Thursday 19 April its annual general meeting it smoothly re-elected Paul Bulcke chief executive officer for the next five years and there were fewer clashes with protesters, the European Patent Office has handed Nespresso a victory and Friday Q1 figures were released showing 7.2 percent organic growth.
Nespresso’s victory, announced at the annual general meeting, was perhaps the least certain of this week’s successes for the company, although the copyright battle over single pod capsules could have a last stand. The European Patents Office upheld an earlier decision backing Nespresso’s patent on the pods that work with its machines. Three companies, Sara Lee Corp, Ethical Coffee Co. and Vergagno in Italy have been fighting the patent. The EPO’s court of appeals is now the last resort for the three.
The company’s financial results for the first quarter show sales up 5.6 percent to CHF21.4 billion, with acquisitions responsible for 3 percent of the increase. Foreign exchange had a 4.6 percent negative impact, says the food multinational.
Bulcke’s assessment: “In many developed markets where consumer confidence is low, the trading environment is subdued whilst in most emerging markets, conditions remain dynamic and rich in growth opportunities. Our past and present investments, and continuing innovation, have enabled us to deliver good growth in the first quarter.”
Jean Studer named bank commission president
Thomas Jordan, new head of the Swiss National Bank
ZURICH, SWITZERLAND – The new head of the Swiss National Bank is Thomas Jordan, as widely expected, in the role of chairman of the governing board. Jean-Pierre Danthine has been named vice-chairman of the board and Fritz Zurbrügg has been named to the board by the Swiss Federal Council.
Jean Studer, a member of the government in Neuchatel and head of the Department of Justice, Security and Finance of the canton Neuchâtel, has been named president of the Bank Council that overseas the central bank.
The SNB provides this bio for Jordan, who has been acting chairman since Philipp Hildebrand’s resignation 9 January.
“Thomas Jordan (born 1963) joined the Swiss National Bank in 1997. With effect from mid-2004, the Federal Council appointed him as Alternate Member of the Governing Board, from the beginning of May 2007, as Member of the Governing Board, and from the beginning of 2010, as Vice Chairman. Thomas Jordan is Chairman of the Board of Directors of StabFund, the stabilisation fund, and represents Switzerland on the Financial Stability Board’s Steering Committee and on the Committee on the Global Financial System at the Bank for International Settlements (BIS). Thomas Jordan is also an Honorary Professor at the University of Bern, Chairman of the SNB’s Study Center Gerzensee Foundation and Chairman of the International Center for Monetary and Banking Studies (ICMB) in Geneva.”
Jordan has said that he remains in favour of enforcing the Swiss franc 1.20 cap against the euro, a policy that Hildebrand began.
Jordan will head Department I in Zurich, covering economic affairs, international affairs, monetary cooperation, legal and property services, as well as support functions.
Danthine will be responsible for Department II of the SNB, which handles financial stability, cash, and finance and risk, mainly from Bern.
Danthine;s background:
“Prior to his appointment, he was Professor of Macroeconomics and Finance at the University of Lausanne, and had been Managing Director of the Swiss Finance Institute since the year of its foundation. Jean-Pierre Danthine is also a member of the Markets Committee at the BIS, Fellow of the European Economic Association, and member of the Academia Europaea. In addition, he sits on the KOF Executive Committee of ETH Zurich.”
Zurbrugg will head Department III, financial markets, banking operations and information technology:
“Fritz Zurbrügg (born 1960) has been Director of the Federal Finance Administration since 2010, where he had been Vice President since 2006. From 2002 to 2006, he held the position of Executive Director of the Swiss-led constituency of the International Monetary Fund (IMF) in Washington, after having been a Senior Advisor there since 1998. Fritz Zurbrügg has broad experience in international monetary matters. He was Head of Section for international monetary matters in the Federal Finance Administration from 1994 to 1998. From 1992 to 1994, he was an economist at the IMF’s Africa Department. Fritz Zurbrügg received his doctorate at the Faculty of Law and Economics at the University of Bern in 1989. From 1985 to 1989, he was assistant at the Institute of Economics at the University of Bern.”
New chairman not yet named, but expected Wednesday morning
The Swiss National Bank has offices in Bern, next to the seat of the federal government (here) and in Zurich
ZURICH, SWITZERLAND – The Swiss National Bank governors meeting in Zurich Wednesday 18 April are expected to name a new chairman to lead the central bank.
Zurich media rumours fed by newspaper NZZ have had it for the past two weeks that Thomas Jordan, acting chairman, will be given the job as a permanent post. He was given the temporary position after the 9 January resignation of Philipp Hildebrand.
The board announced after the meeting was underway that the bank has approved stricter rules concerning staff private financial transactions, in the wake of criticism after Hildebrand’s wife made currency transactions that ultimately led to his resignation.
Hildebrand’s financial accounts were investigated and he was cleared of wrongdoing, but the affair prompted a review of the bank’s internal rules.
Wednesday morning the bank announced it has created an independent compliance unit that reports directly to the chairman “and, if necessary, directly to the chairman of the Audit Committee of the Bank Council. In addition, a unit will be set up to which staff can report irregularities and infringements of regulations.”
The bank has written into its regulations the measure taken at the start of the year, a requirement to seek approval for all foreign exchange transactions over CHF20,000. In addition, “The holding period for financial investments has been extended, transactions in derivatives or structured products whose value is largely determined by movements in exchange or interest rates are now wholly prohibited, and further restrictions have been instituted for certain groups of staff with access to privileged information. Moreover, the control process and disclosure requirements have been enhanced and extended.”
Swiss rental market seeing impact of economic slowdown
Tight market for homes keeping prices up
Trendy city centre areas, such as that around the new Prime Tower in Zurich, are able to demand top prices for housing (photo, Prime Tower)
GENEVA / ZURICH, SWITZERLAND – New apartment leases in urban Switzerland have risen 10 percent a year in the past five years but this could be coming to an end, according to property consultants Wuest & Partner in their most recent quarterly assessment of the Swiss real estate market, but not before a new increase this year. Home prices remain high, with no sign of the very tight market easing, according to “Property market Switzerland 2012/1″.
The report notes that typical transaction prices for standard single-family houses today range from CHF500-700,000 in non-urban areas and CHF1.5 million to CHF2.5 million in Zurich, Geneva and Switzerland’s high-end tourism destinations.
The company has also just published its second annual “Immo-Monitoring”, an in-depth report on the market that shows a dangerous level of overheating in real estate in 102 communes, more than half of them in French-speaking Switzerland, reports news agency ats. Geneva is, to no one’s surprise, one of the hot spots: the price of single-family homes has risen 136 percent in 10 years (2001-2011) while the price of owner-occupied (PPE) apartments has risen 200 percent.
Overheating does not necessarily equate bubble, the consultancy’s Robert Weinert told ats. Investors have few alternatives and the 78,000 newcomers to the Geneva area in 2011 kept demand high.
The report parallels one published by Credit Suisse in February, which expect real estate prices, even high ones, to remain relatively stable: the elements needed to push prices down are not there, with immigration remaining high, confidence in markets high ad interest rates low.
“The effect of interest rates on the housing market is causing price distortions which are increasingly
growing at two distinct rates. Whilst one area experiences a run on condominiums like it
has never seen before, restricting the supply and so causing a worrying increase in property
prices, other areas face problems in placing rental properties, in particular new-build and upscale
properties, and only find relief in the persistently high rate of immigration. The trend is exacerbated
by the fact that the expansion of supply, driven by the increasing focus of institutional
investors on property, is increasingly focused on rented housing. As things currently stand, this
trend is likely to continue throughout the year as fundamental data remain unchanged. The result
will be increasing vacancy rates in the rental sector and continued price rises in residential
property offered for sale. Thanks to the low share of speculative real estate sales though, property
prices are not increasing as a result of a speculative price bubble, but rather as a result of a
overheating of demand. Falling demand and sharp rises in interest rates are much-feared triggers
that could bring about a possible price correction, though not in 2012.”
