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ZURICH, SWITZERLAND – US pressure on the Swiss banking world appears to have claimed one more victim, with the announcement by St Gallen-based Wegelin, generally considered the country’s oldest bank, to sell most of its wealth management business to Raiffeisen in an effort to protect its employees and clients.
Wegelin one of 11 banks investigated by US, 2 countries finance ministers set deadline
The news comes just a day after Swiss President Eveline Widmer-Schlumpf told reporters in Davos that the US and Switzerland hope to conclude tax treaty talks by the end of 2012. She made her remarks after meeting with US Treasury Secretary Timothy Geithner at the World Economic Forum.
The discussions have been the subject of much media speculation, both for their timeline and a likely financial settlement, with some reports in late 2011 that Switzerland had proposed amounts, information denied by the Swiss Tax Office to GenevaLunch. Bloomberg/Business Week quotes the president as saying that “I have expressed that we’ve been in talks for a year, that we’ve invested a lot of time and energy to propose a fair solution,” adding that the two have discussed amounts and that “our aim, and he agreed, is to find a solution where we won’t be confronted with a question about the past every year.”
Reuters noted that the amounts are “possible fines [Switzerland's] banking industry will have to secure a global civil settlement with US authorities” and that Switzerland “is also trying to get the U.S. Department of Justice to drop criminal probes of 11 banks, including Credit Suisse and Julius Baer. “‘I assume we will be able to sort it out for these 11 banks as well as for the banking sector as a whole,’ she said.”
What next for Wegelin clients, staff
A statement issued by Wegelin and Raiffeisen says that “a substantial majority of clients and staff will be transferred to Notenstein Private Bank Ltd, which will become a 100% subsidiary of Raiffeisen for an undisclosed sum. This transaction enables Raiffeisen to substantially strengthen its position in wealth management. Wegelin & Co. Private Bankers will remain in existence to finalize the closure of all remaining US client relationships and to continue the negotiations with the US justice authorities.”
ZURICH, SWITZERLAND – A German state is reportedly considering buying a disk with data about Germans holding bank accounts in Switzerland in order to evade taxes at home, according to a German financial paper. North Rhine-Westphalia has been offered a CD with details of 1,000 clients at the Zurich branch of private bank Coutts, a subsidiary of Royal Bank of Scotland, the newspaper reported late Wednesday.
The bank has not yet issued a statement.
If the information is accurate it comes less than three months after the new Swiss-German double taxation agreement became effective. The treaty, which some German politicians have called too liberal, appeared to calm relations between the two countries after a series of incidents in 2009-2010 that involved stolen bank data that another German state bought and accusations that UBS had helped clients defraud German governments.
GENEVA, SWITZERLAND – Police in Geneva are not immediately releasing details, but an armed robbery reportedly involving three gunmen occurred Monday morning at the UBS bank offices near the Cornavin train station in central Geneva.
Details to follow as they are released.
BERN, SWITZERLAND – Bank account holders in Switzerland in 2008 saw their deposits legally protected, as a temporary measure, up to CHF100,000 as part of the political fallout of the Swiss governments bailout of UBS. A series of measures were signed urgently and temporarily into law to better protect consumers. Wednesday 24 August the Swiss Federal Council signed the measures, which have seen some improvements, into law permanently.
The new law requires banks to have assets in Switzerland that will cover their obligations to account-holders, and the revised regulations carry several changes including:
- rules have been reinforced for a bank in difficulty to reimburse consumers immediately
- the ceiling for a bank’s obligation to reimburse is fixed at CHF6 billion
- additional privileges have been granted to pension funds’ investments and accounts, for their reimbursement.
A number of steps to improve the banks’ health are also part of the new law.
UBS consumption indicator at its lowest level this year
ZURICH, SWITZERLAND – Swiss banking giant UBS AG warned of job losses after a strong Swiss franc and “economic uncertainty” led to a near halving in second-quarter profits.
The Zurich-based bank said it would slash costs over the next two to three years but declined to comment on how many jobs will be cut, saying only it will take a look at the restructuring later this year.
During the presentation of its second quarter results this morning, UBS said its net and pre-tax profits had dropped, and lowered its annual earning forecasts. Pre-tax profits UBS said, fell to CHF1.7 billion from CHF2.2 billion in the previous quarter.
“Having reached a high point for the year in May, the UBS consumption indicator fell significantly by 0.40 points to 1.48 in June, the lowest level this year.”
Group revenues was CHF 7.2 billion, down 14% due to “lower client activity and currency movements,” said the report.
Full report: UBS consumption indicator at its lowest level this year and UBS second-quarter profit before tax CHF 1.7 billion; Group net new money CHF 8.7 billion; tier 1 capital ratio 18.1%.
Zurich, Switzerland (GenevaLunch) – Former Bank Julius Baer employee Rudolf Elmer has given a CHF7,200 suspended fine but no prison sentence for stealing data from the bank and handing it to tax authorities, the media and whistleblowing web site WikiLeaks. He will pay CHF5,000 in court costs; the loser in Swiss court cases generally bears the cost.
The judge found Elmer, who admitted to breaking Swiss banking secrecy laws, guilty of theft and of threatening his former employer, but charges of making a bomb threat and anonymously demanding CHF50,000 were dismissed.
The prosecution had called for a firm prison sentence of eight months, but the judge is not sending him to jail. The fine was higher than the CHF2,000 asked by the prosecution, but it was suspended, meaning that
Links to other sites: romandie (Fr), NZZ (Ger), swissinfo, TSR (Fr)
Lucerne, Switzerland (GenevaLunch) – Julien Kénord, 27, who worked for Caritas, Switzerland in Port-au-Prince, Haiti, was killed Friday 8 October, the group announced Tuesday. He had just cashed a Caritas check for $2,000 at a bank in the city and was seated in his car when he was beaten by an unknown assailant. Shortly after, he died in hospital, from injuries sustained in the attack.
Police in Haiti have opened an investigation into the attack and death. Caritas, while deploring his death, says it will carry on the work it began in Haiti 12 years ago. The group provides basic survival assistance to families in distress, and it recently undertook the reconstruction of 1,700 homes in the area ravaged by the January earthquake, in Gressier, west of Port-au-Prince.
Lausanne, Switzerland (GenevaLunch.com) - A group of would-be thieves who tried to rob the UBS in Rolle, canton Vaud, made a speedy getaway and succeeded in escaping from police despite a high-speed chase in the early hours of Monday 19 July.
Police were contacted by several neighbours who heard unusual noises and noticed several masked invidividuals around the cash machine at the bank, at 03:20. One of the thieves was trying to remove the machine, using a cable and a Cherokee Jeep stolen shortly before the robbery, but didn’t succeed. The group fled as police arrived on the scene.
They drove off in two cars whose make is not known, say police. A large manhunt was set up immediately by the regional police centre, and they were spotted between Gland and Coppet on the A1 autoroute, traveling at high speed.
A police chase ensued, but they outdistanced the police and were lost heading in the direction of Geneva.
Anyone with information is asked to contact the police at +41 21 644 4444 or to go to the nearest police station.
Three people have died in Athens and four are reportedly missing after a fire bomb hit a bank in central Athens. The victims were Marfin bank employees, according to CNN, and another 20 employees are reported to be trapped on floors above the fire. Several cars, trash bins and buildings have been set on fire elsewhere in the city as the anti-austerity measures strike and protests turn violent.
Bern, Switzerland (GenevaLunch) - Swiss bank UBS will be billed an estimated CHF40 million by the Swiss government for the cost of providing help to US judicial authorities based on two requests, the Federal Council announced Wednesday afternoon 28 April. The government earlier this year said it would bill the bank CHF1 million but today it said that its expenses would amount to CHF40m and “the particular circumstances leading to both administrative assistance requests from the Internal Revenue Service (IRS) on account of the conduct of UBS in the United States justify billing the costs incurred to UBS.”
Swiss parliament in session Photo®Swiss parliament
The requests for help were made in July 2008 and August 2009 and are part of the search by US tax authorities for information on fraud-related bank accounts held at UBS. The August 2009 request led to the treaty signed between the two countries where Switzerland agrees to review 4,450 bank accounts by August 2010. The treaty will soon be debated by parliament, which must ratify it for it to be signed.
Swiss law does not have any provision for a bank or other financial institution to be billed for costs when requests for assistance are made, so the Federal Council has prepared a draft resolution for the parliament that covers only this case and only UBS.
Background, GenevaLunch
A group of thieves tunneled their way into an underground vault at Credit Lyonnais in Paris Saturday night 27 March and took off with an unknown amount after nine hours of work, police say. They worked their way from a neighbouring building at the Place de l’Opera into the bank, where they tied up a security guard while they lifted the contents of some 200 private safes. They set fire to the building, which was then flooded by the sprinkler system that was triggered by the fire alarm.
Bern / Zurich, Switzerland (GenevaLunch) – Marcel Ospel has told Swiss magazine Blick that he is ready to appear before a Swiss commission to answer questions about the debacle of the bank he headed two years ago, UBS. He has refused to comment or answer questions from political bodies since he left the bank in April 2008.
Political parties have begun wrangling, widely expected in Switzerland, over the US-Swiss agreement which covers UBS providing information to the US about 4,450 client accounts. Parties on the left are lining up to approve it only if pay caps are placed on bankers’ salaries, while the centre-right is arguing in favour of Parliament approving it, to secure the future of Switzerland as a financial centre.
US bank Wells Fargo paid its chief executive officer John Stumpf $21.3 million in 2009, a sharp increase over his pay package of $8.8m in 2008, putting him at the top of the pay scale for US bankers in 2009. The bank repaid the federal government $25m, to the Treasury’s Troubled Asset Relief Program (Tarp) in December 2009, freeing it from the programme’s restrictions on pay. It more than doubled the pay of its senior executives for the year, while technically lowering their salaries. (Ed. note: AP calculates, based on its analysis of executive pay as listed with federal regulators, that he earned $18.7m).
Links to other sites: Bloomberg, Business Week/AP, Los Angeles Times
Two bombs have killed 49 people, unofficial sources report, with the death toll rising as many of the scores of injured are in critical condition, in Lahore Pakistan. It is unclear if the blasts were two suicide bombs or one, followed by a remote-control device exploding in the heart of Lahore’s commercial centre. One bomb went off in a crowded market, where shops and motorcycles quickly caught fire, and the other near a bank, late Monday 7 December.
Zurich, Switzerland (GenevaLunch) - Julius Baer Group has agreed to buy ING Bank (Switzerland) Ltd, based in Geneva, for CHF520 million, the Swiss bank announced 7 October. The ING bank will be folded into Bank Julius Baer. The combined assets under management (end August 2009 figures) will be CHF160 billion, with the Dutch bank subsidiary’s CHF15 billion under management providing Julius Baer with a 10 percent boost to assests under management. Julius Baer’s position as the top Swiss wealth management bank is thus ensured.
ING has 310 employees, of which 80 are relationship managers, and the its addition will double the presence of Julius Baer in Geneva. The wholly-owned ING subsidiary’s business in Monaco and Jersey are included in the deal, which is expected to go into effect in early January pending regulatory approval. ING Bank is strongly capitalized, the Baer Group says, and it has a net asset value of about CHF 380 million.
Links to other sites: Julius Baer press release, Bloomberg, Financial Times
Update 18 August 12:10 Zurich, Switzerland and Los Angeles, California, USA (GenevaLunch) - John McCarthy of Pasadena, California last week became the fourth American citizen to turn himself into the US Justice Department as a client who had a secret offshore UBS bank account, set up to hide his real identity and to defraud the IRS tax authorities. His name was one of those in the group of clients whose account information was given by UBS to the IRS in February 2009. The details of the case where he is expected to plead guilty when he appears in court 14 September were published by the US Department of Justice’s California division.
According to the press release “McCarthy admitted that, with the assistance of UBS representatives and his Swiss lawyer, he directed the investment activities and transfers of funds into and out of the COGS UBS Swiss bank account, as well as from other UBS Swiss accounts he controlled.
Updated 17 August Geneva and Zurich, Switzerland (GenevaLunch) – International media are playing merry-go-round, speculating over the number of names of clients Swiss bank UBS will be required to hand to the IRS tax authority in the US, in the absence of any serious information: two Swiss newspapers, NZZ‘s Sunday edition and Sonntag over the weekend calculated that 4,500 to 5,000 names will be turned over, citing their own research – and US media.
The New York Times carried a story Friday 14 August where the number 5,000 was mentioned by a Washington, DC lawyer and former Justice Department official with no explanation for how he arrived at the figure.
Washington, DC (GenevaLunch) – Swiss Foreign Minister Micheline Calmy-Rey and US Secretary of State Hillary Clinton met in Washington, DC Friday 31 July for their second working visit since March 2009 when the two met in Geneva, Switzerland. The two had little to say to the press following the meeting, followed with more than usual interest because of the announcement earlier in the day that the two governments had reached an Agreement in Principle for an out of court settlement in the UBS bank court case.
According to the Swiss foreign affairs office, the talks covered mainly “the situations in the southern Caucasus, the Near East and the Middle East. Secretary of State Clinton took the opportunity to thank Switzerland for representing the USA in countries such as Iran as well as for Switzerland’s commitment to many internationally important issues, in particular in its role as a mediator.”
UBS case mentioned, not discussed
The Agreement in Principle in the UBS case was mentioned, but was not discussed, with the two saying that teams from the two governments will be working out details of the agreement in the coming week.
Transcript of the post-meeting press briefing in Washington
Video from the US State Department
Zurich, Switzerland (GenevaLunch) – Swiss bank UBS is offering 293 million newly issued shares to institutional investors that it expects will raise CHF3.8 billion in new equity capital, the bank announced Friday morning 26 June. The share price is CHF13. The offer is not open to US investors. UBS announcement
Zurich, Switzerland (GenevaLunch) – Bank Julius Baer, the country’s largest private bank, has revised its 2008 figures, attributing them to the two completely separate groups it will present to shareholders at a 30 June Extraordinary General Meeting. The bank is splitting its private banking and asset management business, with the first to be called Julius Baer Group, with assets of CHF3.5 billion and the second Gam Holding, with CHF3.0b in assets.
Zurich, Switzerland (GenevaLunch) – Swiss consumer spending was up slightly at the end of April, but the overall UBS consumption indicator slipped in one month from 0.99 to 0.92 and longer term prospects are “becoming increasingly gloomy,” the bank notes. Switzerland’s largest bank publishes the indicator monthly.
New York, USA and Geneva, Switzerland (Le Temps and 20 Minutes/afp, Fre) – The latest financial fraud scheme to be discovered by the SEC, it reports, appears to have involved a Geneva financial group, United Trust of Switzerland, with US clients as the target and some $68 million lost in the a Ponzi scheme similar to the one created by Bernard Madoff. The bank offers only an address in the Caribbean despite its wholly-owned subsidiary, Millennium Bank, saying it has been in business since 1931.
Japan’s Nikkei was up 14 points, a one-day record gain, and European stocks appeared set to repeat Monday’s strong gains, with the largest gain at “Societe Generale SA [which] rallied 13 percent after posting a profit and saying it doesn’t need additional capital. Oil headed for its biggest two-day advance in three weeks” (Bloomberg) as financial markets around the world begin to react positively to more government intervention, ahead of the US pumping $250 billion into nine banks. CNN, Financial Times
The Irish government announced Thursday that it is extending its guarantee for bank deposits to four foreign banks that have “significant” operations in the country, in addition to Irish banks. Irish Times
