ZURICH, SWITZERLAND – UBS, Switzerland’s largest bank, posted a full-year net profit of CHF4.23 billion, compared to CHF7.5b in 2010. The bank’s revenues were up in some areas and new money under management grew strongly, up CHF42.4 billion for the year, showing a turnaround in consumer confidence.
But profits were hurt by fourth quarter losses in investment banking due to stagnant market conditions, with a significant slowdown in trading stocks and bonds. The bank warned investors that the first quarter of 2012 could prove difficult:
“As in the fourth quarter of 2011, ongoing concerns surrounding eurozone sovereign debt, the European banking system and US federal budget deficit issues, as well as continued uncertainty about the global economic outlook in general, appear likely to have a negative influence on client activity levels in the first quarter of 2012. Such circumstances would make sustained and material improvements in prevailing market conditions unlikely and would have the potential to generate headwinds for revenue growth, net interest margins and net new money. In light of the above, traditional improvements in first quarter activity levels and trading volumes may fail to materialize fully, which would weigh on overall results for the coming quarter, most notably in the Investment Bank.”
Analysts, according to financial media, were looking for Q4 net profits of CHF658 million but UBS reported CHF393m, down from third quarter profits despite the write-off in Q3 of 1.8 billion lost by a rogue trader.
Analysts were also looking at the bank’s capital-building and to see how well UBS is offsetting reduced revenue streams with continued cost-cutting. They were not disappointed here: UBS is currently one of the world’s best capitalized banks, noting in its statement to media Tuesday that it had reduced “Basel III risk-weighted assets by an estimated CHF20 billion and [was] building capital ratios”.
In 2011 it cut the bonus pool by 40 percent as part of cost reductions of CHF2.1 billion. Total costs last year were CHF22.4b. The company trimmed jobs but overall staffing remained at nearly 65,000 employees worldwide.
The year-end results were published with fourth quarter results before markets opened Tuesday 7 February.
BERN, SWITZERLAND – Comco, Switzerland’s competition commission, has opened an investigation into more than 10 international banks and companies and the country’s two largest, UBS and Credit Suisse, for possible “collusion between derivative traders [that] might have influenced the reference rates Libor and Tibor. Furthermore, market conditions regarding derivative products based on these reference rates might have been manipulated, too.”
The investigation follows what Comco calls an application to its leniancy programme, or self-denunciation, without providing details of who provided the information. The investigation could take several months. The banks targeted by the investigation include: Bank of Tokyo-Mitsubishi UFJ, Citigroup Inc., Deutsche Bank Aktiengesellschaft, HSBC Holdings plc, JP Morgan Chase & Co., Mizuho Financial Group Inc., Rabobank Groep N.V., Royal Bank of Scotland Group plc, Société Générale SA and Sumitomo Mitsui Banking Corporation.
Libor, the London interbank lending rate and Tibor, in Japan, are rates set daily based on bank data, which serve as underlying lending rates. The Swiss National Bank defines Libor as:
“The Libor (London Interbank Offered Rate) refers to the interest rate for unsecured money market loans to prime banks. Each bank business day, specific banks report to the British Bankers’ Association (BBA) the interest rate at which they would be able borrow unsecured funds of a reasonable market size on the London interbank market shortly prior to 11 a.m. The relevant top and bottom-quartile interest rates are disregarded when fixing the Libor. An average is calculated on the basis of the remaining interest rates, and the figure obtained in this manner is fixed and published as the Libor for the day in question. Libor rates are fixed in different currencies and with varying maturities.”
The investigation comes three weeks after European Union anti-trust boss Joaquin Almina said the EU is stepping up its efforts to ensure that derivatives markets remain free and competitive. Antoine Colombani, spokesperson for the European Commission is cited by Bloomberg as stating in January that “Last October we carried out unannounced inspections at the premises of a number of undertakings active in the sector of euro interest rate derivatives based on Euribor benchmark rates,” but that it had not opened a formal investigation.
“Regulators in the US, UK and European Union have been examining how Libor is set, while Japan’s securities watchdog has probed Tibor,” according to Bloomberg.
Comco’s statement notes:
“The London Interbank Offered Rate (Libor) and the Tokyo Interbank Offered Rate (Tibor) are reference rates which are aimed at reflecting the interest rate level in the interbank deposit market. The British Bankers’ Association (for Libor) and the Japanese Bankers’ Association (for Tibor) calculate these reference rates on a daily basis, for a range of currencies, based on submissions by respective panel banks. Derivative traders working for a number of financial institutions might have manipulated these submissions by coordinating their behaviour, thereby influencing these reference rates in their favour. Moreover, derivative traders might have colluded to manipulate the difference between the ask price and the bid price (spread) of derivatives based on these reference rates to the detriment of their clients.”
Comco says that assessing ‘the effects of the alleged practises on Swiss clients and companies is one of the aims of the investigation”.
ZURICH, SWITZERLAND – Wegelin Bank in St Gallen, possibly Switzerland’s oldest bank, made headlines back in August 2009 when it published a newsletter with the heading “Farewell America”, saying it was pulling out of the US and advising its clients to get out of US securities. This week the bank says it is prepared for a fight with the US: it confirmed to Reuters Wednesday that three of its employees, all working in Switzerland, have been charged by US authorities with helping US citizens avoid taxes by hiding their money in Switzerland.
“‘Although US law has some scope for interpretation in this case, Wegelin & Co is certain that Swiss law was not broken at any point,’” the bank is quoted by Reuters as saying in an e-mailed statement. “‘The accused employees worked for the bank within the borders of Switzerland.’”
The bank did not mince words in its criticism in 2009, on moral grounds, of the direction in which the US government is moving, noting in its August 24 Investors Newsletter lead article called “Farewell America” that “the next round of fiscal enforcement staged by the Americans will be devoted not to the American super-rich, but to non-Americans who never in their lives had any intention of evading taxes.”
The three bankers were charged in Manhattan with trying to “capture” business from UBS in 2008 and 2009 when it was famously investigated by the IRS. Switzerland’s largest bank later paid a fine of $780 million to the US.
Stock markets down on gloomy news
ZURICH, SWITZERLAND – Standard & Poor’s applied new credit rating standards to 37 of the world’s largest banks 30 November, which resulted in the downgrading of a number of major banks, for different areas of their businesses. Seven of eight US banks on the list were downgraded. China Construction Bank received an upgrade, the only bank to do so. And 20 banks remained “stable”.
The agency published new criteria for bank ratings 9 November, so the downgrades were not completely unexpected, but shares fell across Europe on the news, reports Business Week. S&P’s did not immediately provide details oabout individual downgrades, but will do so Wednesday. Switzerland’s largest bank, UBS, was given a rate of A, down from A+.
Other banks downgraded include US-based Bank of America Corp. and several subsidiaries, Citigroup, Goldman Sachs Group, JP Morgan Chase & Co, Morgan Stanley and Wells Fargo & Co.
In the UK, Barclays, Lloyds, Bank of Scotland and HSBC were downgraded.
The changes could increase the borrowing costs of the banks.
AP suggests that Bank of America could be hurt most by the cut, while the Financial Times
UK residents with Swiss accounts affected in 2013
BERN, SWITZERLAND – The Swiss and UK governments Thursday 6 October signed an agreement reached earlier, that will allow the British government to tax income on assets held in Swiss banks by UK residents.
The Swiss government announced that “Federal Councillor Eveline Widmer-Schlumpf and the UK Exchequer Secretary to the Treasury David Gauke signed a tax agreement. Under this agreement, persons resident in the United Kingdom can retrospectively tax their existing banking relationships in Switzerland either by making a one-off tax payment or by disclosing their accounts. Future investment income and capital gains of British bank clients in Switzerland will be subject to a final withholding tax, and the proceeds of this will be transferred to the British authorities by Switzerland.”
In addition, says Bern, the new agreement will give Swiss banks better access to the UK financial market.
The agreement is similar to one signed in September with the German government and to one being negotiated with France.
UBS CEO's Oswald J Grübel resigns - Photo UBS
ZURICH, SWITZERLAND – Oswald Gruebel, 67, has resigned as CEO of UBS AG, Switzerland’s largest bank, after a $2.3 billion dollar loss from unauthorized trading.
On a statement released on Saturday 24 September, UBS stated that the board had named Sergio Ermotti, the bank’s European head, as interim CEO.
UBS said in July that former Deutsche Bundesbank President, Axel Weber would become chairman in 2013, but there’s no word yet if he will take on the job earlier than planned.
According to an article by Swiss financial-magazine Bilan, Oswald Gruebel was under heavy pressure from the board to leave, as they met on 22 September.
However, UBS’s Chairman Kaspar Villiger who announced Grübel’s resignation said:
“The Board regrets Oswald Grübel’s decision. Oswald Grübel feels that it is his duty to assume responsibility for the recent unauthorized trading incident. It is testimony to his uncompromising principles and integrity. During his tenure, he achieved an impressive turnaround and strengthened UBS fundamentally. He steps down having helped make UBS one of the world’s best capitalized banks. On behalf of the Board of Directors, I extend my heartfelt gratitude to him for everything he has done for UBS.”
Grübel who took his post in February 2009, will receive no severance and have no further role at the bank.
Odier praises recent agreements with UK, Germany and says US must respect existing Swiss law
Patrick Odier, left and Brady Dougan, head of Credit Suisse, in 2009
ZURICH, SWITZERLAND – Patrick Odier, president of the Swiss Bankers Association (SBA), says that a new Swiss treaty with the US, similar to the one negotiated for the transfer of banking data from UBS to the US but covering additional banks, would not be likely to be approved by parliament.
“The cross-border problems with the United States can and will be solved. But the United States must understand that Swiss laws must be respected,” Odier said at a news conference.
Odier’s remarks were made at a news conference in Zurich Monday morning 5 September in a run-up to the annual Swiss Bankers Day Tuesday 6 September.
He also emphasized that the new tax agreements negotiated with Germany and the UK point the way forward in resolving Switzerland’s tax and banking disputes with other countries, but also what the banking industry sees as its bigger challenge: they represent a milestone in implementing the 2015 Financial Centre Strategy set out by the association, one of the goals of which is acquiring and managing taxed assets.
“Bank client secrecy protects wealth and does not hide it. This protection remains important,” Odier insisted to journalists.
Swiss banks in 2010 had earnings of CHF61.5 billion, which the SBA attributes to a growing economy and low interest rates. Earnings were up by 13.4 per cent. Total assets rose by 1.7 per cent to a total of CHF2,714.5 billion. The total volume for mortgages and bank loans last year was CHF 898 billion. The majority of lending continued to go to private households, SBA figures show.
The organization is at odds with the federal government over keeping mortgage lending risks under control.
“The current upward price trend on the real estate market, with scattered hot spots, is due to low interest rates and rising demand. The banks are working with FINMA to find a solution that would strengthen certain aspects of the existing self-regulation for lending. The SBA was therefore surprised by the announcement made by the Swiss Federal Council to strengthen the capital adequacy requirements for the mortgage business. The SBA remains sceptical about the effectiveness of any quantitative regulations. In particular, even in the area of exceptions-to-policy, the SBA would expect to see risk-based capital adequacy requirements.”
The SBA says it is supports Swiss government efforts to seek “a sustainable solution to the open issues regarding the cross-border business with the United States. A solution must be applicable worldwide, definitive and correspond to existing Swiss law”, the group says in a statement issued Monday morning.
Reuters reports that “a long tradition of bank secrecy has helped Switzerland build up a $2 trillion offshore financial industry, but the country has agreed in recent years to do more to help hunt tax cheats amid a global crackdown on tax havens. The government is keen to find a solution that would avoid needing the approval of parliament which only reluctantly agreed to the UBS treaty under emergency law last year.”
GENEVA, SWITZERLAND – Europe’s largest retail bank, HSBC in the UK, announced job cuts 1 August that will reached 30,000 by the end of 2013, joining Switzerland’s UBS and Credit Suisse, as well as other large banks that have announced major staffing cuts in the past two weeks as financial markets fail to bounce back as expected from the 2008-09 global economic crisis. Credit Suisse expects to cut 2,000 jobs and UBS has not yet confirmed the number it will eliminate.
The HSBC job cuts were announced along with financial results that show a 36 percent increase in profits to $9.22 billion from $6.76 billion a year earlier. The bank is preparing to meet higher capital requirements under new Basel III world bank regulations.
Business Week reports that HSBC’s proportion of profits from Asian business rose to 76 percent, up nearly 10 percent compared to a year ago, while the share of its expenses based in Asia were just over 46 percent. Job cuts will occur in its offices worldwide, but the bank is likely to be hiring in Asia.
BERN, SWITZERLAND – The finance commission of the Swiss parliament’s lower house has given its approval to new rules that would require Switzerland’s two largest banks, UBS and Credit Suisse, to increase their capital bases substantially above the amount required by Basel III global requirements.
Basel III rules were established by the Basel Committee on Banking Supervision and have been the subject of heated international debate in recent months.
The change in Swiss banking law, proposed to parliament by the governing Federal Council (cabinet), went through an upper house commission Monday.
It will now be debated in both houses this summer and, if approved, could be implemented starting in 2012, with a six-year period to gradually implement it.
The Swiss National Bank has thrown its support behind the tough new Swiss law, which was written after the government’s 2008 bailout of UBS during the global financial crisis.
Bern, Switzerland (GenevaLunch) - PostFinance, the financial arm of Swiss Post, has attracted 18,000 new clients in the first three months of 2011 and its earnings are up 39 percent over Q1 in 2010, to CHF 181 million, Swiss Post announced 9 May.
Customer deposits rose by CHF5.2 billion to CHF89.4 billion. “This increase lead to improved net interest income, up by 22 percent on the same period last year, despite a consistently narrow interest margin. This is the main reason for earnings of CHF 181 million,” the Swiss post office says in a statement.
The number of new accounts increased significantly, by 48,000, nearly double the number of new accounts the previous year, in the same period.
Zurich, Switzerland (GenevaLunch) – ABB‘s financial report for the first quarter of 2011, published Wednesday, is upbeat, with a 25 percent increase in orders for the industrial engineering multinational, while net income rose 41 percent to CHF655 million.
ABB robotics packing furniture panels (photo: ABB)
Earnings before interest and taxes (EBIT) increased 43 percent to approximately $1 billion. Company head Joe Hogan attributes the solid performance to lower costs and successful targeting of growth areas.
Credit Suisse published its results, the day after UBS, showing net income of CHF1.1 billion, in line with analysts expectations, with net new assets of CHF19.1b. Income was down 45 percent compared to a year earlier, but up 35 percent compared to the fourth quarter of 2010.
The weaker performance compared to a year earlier was due, according to chief executive officer Brady Dougan, to “own debt and stand-alone derivatives relating to own funding liabilities” as well as to the franc’s continued strength against the dollar.”
Both net income and new inflows of money were lower for Switzerland’s second largest bank than for UBS.
Zurich, Switzerland (GenevaLunch) - International financial media are greeting first quarter figures from UBS with gloomy headlines, despite higher profits posted by the bank in its first quarter results Tuesday morning. UBS published figures showing pre-tax Q1 profits of CHF1.8 million, up over the previous quarter (CHF1.7b), but 18 percent lower than the CHF2.2b Q1 profits in 2010.
Bloomberg, oddly, initially carried a headline of “UBS posts decline in quarterly net on lower securities earnings” but changed the heading to the more upbeat “UBS attracts highest inflows since 2007 as profit tops estimates”.
The bank’s note that net new money is up, “with positive net flows recorded across all of our asset-gathering businesses confirming the return of client trust and confidence”. New money rose from CHF7.1 billion in Q4 2010 to CHF22.3b. The issue of new money has been watched closely by analysts in recent months. Reuters recalls that “clients pulled nearly 400 billion francs from the world’s second-largest wealth manager in recent years after UBS was bailed out following huge writedowns on toxic assets and was hit by US charges that it helped wealthy Americans dodge tax.”
Zurich, Switzerland (GenevaLunch) – Bank Julius Baer has agreed to pay the German government CHF50 million in a one-time payment, to close an investigation the bank describes as potentially lengthy and cumbersome for both sides.
The payment “will end the investigations against Julius Baer and unknown employees regarding undeclared assets of persons who are subject to taxation in Germany. The investigations were prompted by voluntary self-disclosures of German clients and – as the media reported already last year – by data acquired and collected by authorities,” the bank said in a statement issued Thursday 14 April.
The bank says it sees the action as leaving it “free from allegation” and there free to “now continue to fully concentrate on building and further expanding its business with German clients.”
Switzerland: IMF checks economic winds in 2011
Bern, Switzerland (GenevaLunch) - The IMF (International Monetary Fund) in its annual country report on Switzerland says the economy is broad-based in the aftermath of the global economic crisis. It is forecasting 2.1 percent growth for 2011 and 1.8 percent in 2012, when it expects exports to fall.
“Domestic demand is benefiting from low interest rates, increased employment and continuing immigration. In spite of the strength of the Swiss franc, exports have grown due to increased global demand.” Geopolitical tensions could have a negative impact and are the biggest risk factor, agreed the IMF team, who visited Switzerland from 18 to 28 March. Tensions in the euro zone could also spark difficulties.
The SNB (Swiss National Bank) could consider tightening monetary policy, the IMF group says, with rebuilding its capital a priority. The central bank’s capital was drained during the crisis, as were those of many governments. Future dividends to the cantons and the Confederation should be made subject to the ability of the SNB to replenish its capital.
The heaviest criticism was reserved for the banking regulatory system, which needs further work, according to the IMF. The Federal Department of Finance will create a working group to follow up one issue: the mandates of the SNB and Finma, the financial supervisory body, should be clarified, according to the IMF.
Additional capital requirements provided for in the Federal Council’s “too big to fail” consultation draft will be instrumental in limiting the risks posed by systemically important banks. Consequently, the IMF experts warn against allowing overly generous “rebate” possibilities. Switzerland’s new capital requirements are among the most stringent in the world, going well beyond bank capital requirements that are part of the new, global BIS (Bank for International Settlements) Basel agreement.
In the mortgage market, the IMF sees a certain degree of easing in financial institutions’ lending standards, says Bern. “The interest-rate sensitivity of banks’ balance sheets has increased due to the tendency towards fixed-rate mortgages with long maturities” and the IMF is in favour of “implementing more conservative affordability standards”, which could be bad news for new home owner wannabes.
The IMF has given its support to several ongoing improvements:
- “The neutral fiscal position to be expected over the next few years is considered appropriate” says Bern’s statement on the IMF visit
- the measures to restructure disability insurance must continue
- the IMF welcomes the ongoing efforts to strengthen financial planning and statistics.
Zurich, Switzerland (GenevaLunch) – Hans Baer, scion of the Baer banking family in Zurich died Monday 21 March, age 83, the family announced Tuesday, and with him disappeared a period in Swiss banking history. He was the father of Raymond Baer, chairman of the Board of the Julius Baer Group.
Hans Baer ruled over the family business, one of Switzerland’s most successful private banks, for nearly 30 of the 50 years he worked for the firm, as president of the Executive Board and then chairman before his retirement in 1996. He oversaw the bank’s opening of offices in New York and London. He also oversaw the first public offering of shares, not a surprise given that years earlier, in 1983 when I, as a young reporter working for Time Magazine interviewed “Papa Baer” (and he looked the part, charming and warm and larger than life), he told me that this was where the future of his bank would lie.
The bank later went public and is now listed on the Swiss Stock Exchange as a member of the SMI group of top 20 companies. It is Switzerland’s third largest bank.
Hans Baer was also well known for his active involvement in the arts and for his dynamic contributions to his hometown of Zurich. He was the founding president of the Zurich Festival, among his many projects.
Credit Suisse, Zurich
Zurich, Switzerland (GenevaLunch) – Four bankers who work for Credit Suisse have been indicted in eastern Virginia in the US on charges of conspiring with other bankers to defraud the US government, its justice department and the IRS tax arm of the government. The Department of Justice (DOJ) press release does not name the bank, but Credit Suisse has confirmed the information to TSR, Swiss public television, and other Swiss media.
The four include a Geneva banker, Marco Parenti Adami, and three others, Emanuel Agustino, Michele Bergantino and Roger Schaerer.
Parenti Adami is a senior manager whose several duties include responsibility for North American clientele for French-speaking Switzerland at Credit Suisse, where he has worked for 17 years.
The DOJ statement says:
“According to the indictment, the defendants and their co-conspirators solicited U.S. customers to open secret accounts because Swiss bank secrecy would permit them to conceal from the IRS their ownership of accounts at the bank and other Swiss banks. It is further alleged that they provided unlicensed and unregistered banking services and investment advice to customers in the United States in person while on travel to here, including at the international bank’s representative office in New York City and by mailings, e-mail and telephone calls to and from the United States.
“The indictment further alleges that the defendants and their co-conspirators caused U.S. customers to travel outside the United States, to destinations including Switzerland and the Bahamas, to conduct banking related to their secret accounts; opened secret accounts in the names of nominee tax haven entities for U.S. customers; accepted IRS forms that falsely stated under penalties of perjury that the owners of the secret accounts were not subject to U.S. taxation; advised U.S. customers to structure withdrawals from their secret accounts in amounts less than $10,000 in an attempt to conceal the secret account and the transactions from American authorities; and advised U.S. customers to utilize offshore credit, and debit cards linked to their secret accounts and provided the customers with such cards, including cards issued by American Express, Visa and Maestro.”
Credit Suisse, which says it is cooperating with the DOJ in the investigation, insists that it is not the target of the IRS. But the DOJ statement notes that “As of the fall of 2008, the international bank maintained thousands of secret accounts for customers in the United States with as much as $3 billion in total assets under management in those accounts. The conspiracy dates back to 1953 and involved two generations of U.S. tax evaders including US customers who inherited secret accounts at the international bank.”
TSR points out that the case against Switzerland’s other major bank, UBS, began in a similar way, with charges against a small number of bank managers before it escalated into a demand by the DOJ for data on thousands of Swiss bank accounts.
The bankers, if found guilty, could face up to five years in prison and fines of $250,000 each.
Link to other sites: Bloomberg, US Department of Justice, TSR (Fre)
Bern, Switzerland (GenevaLunch) – PostFinance, the banking arm of the La Poste, the Swiss postal system, is giving deposit account holders 2010 centimes, a little over CHF20, to say thanks for making 2010 a good year.
Profits were up 28 percent, it announced Wednesday 23 February, to CHF575 million. PostFinance acquired 119,000 new customers who set up 198,000 new accounts.
“Despite the difficulties on the financial markets, good interest income was one of the main factors leading to this excellent result, along with cost discipline,” PostFinance noted in its press releasee.
Euro deposit holders will receive 2010 cents if they had interest-earning accounts 31 December 2010.
Bern, Switzerland (GenevaLunch) – The Swiss government is increasing sanctions against Iran to the same level as those put in place by its main commercial partners, the government said Wednesday morning 19 January. The tougher measures were taken to ensure that Switzerland is not used by Iran to get around the stricter sanctions put in place by the European Union, in particular, in October 2010.
The list of persons whose assets are frozen is also being extended, the same day that the Swiss have moved to freeze assets of former Tunisian President Ben Ali and Laurent Gbagbo of Cote d’Ivoire, who has refused to give in to pressure from other countries to acknowledge he did not win his country’s recent elections.
Swiss exports to Iran were CHF700 million in 2010, mainly pharmaceuticals, machinery and agricultural products. Imports came to CHF41 million. The volume of trade fell by CHF63 overall, compared to 2009.
The new level of sanctions is also needed to give legal protection to Swiss companies operating internationally, according to Bern, as they now risk being caught between two levels of sanctions.
Zurich, one of three Swiss cities where JP Morgan will expand its operations
Zurich, Switzerland (GenevaLunch) – Switzerland’s preeminence as a banking powerhouse does not seem to be fading; a Tages-Anzeiger article published today 5 January says giant financial services firm JP Morgan will be bringing hundreds of new jobs to Geneva, Zoug and Zurich.
Martin Schütz, Co-Chairman of JP Morgan in Switzerland is quoted in the article as saying their work force will grow to 1,000 employees; that is an increase of almost 400 new jobs from now until 2012.
“Switzerland has always been at the heart of our international finance strategies” said Schütz. “Our customers benefit from a strong currency, minimal inflation, prudent national banking and high quality service,” he added.
Zoug is becoming an important market in JP Morgan’s financial strategies as the town is developing into an international trade centre of raw materials and metals.
In December 2010 JP Morgan in London also expanded operations thus reaffirming the company’s previous statements that Europe is becoming an important market for its expanding financial and trade services.
JP Morgan Chase’s corporate headquarters are in New York City.
PostFinance sued by Pirate Party
Geneva, Switzerland (GenevaLunch) – Klaus Schwab, head of the World Economic Forum, says he would like to, and should, invite WikiLeaks founder Julian Assange to the WEF meeting in Davos in January.
SonntagsZietung published an interview with Schwab Sunday 19 December. Assange cannot leave the United Kingdom under the terms of bail granted by a judge there, Schwab pointed out, so unless Sweden completes its investigation of charges of sexual misconduct brought against Assange and releases him, it’s unlikely he will make an appearance at the Swiss resort.
Schwab told the newspaper that the focus this year at Davos, which every winter pulls in some of the world’s top political and business leaders, will be on lessons learned from the financial crisis, but that WikiLeaks will clearly be on the agenda. “WikiLeaks is the expression of a new reality,” he told the Swiss-German newspaper.
“The balance privacy and transparency has changed fundamentally, and governments, businesses and decision-makers will have to accept that from now on, they are living in glass rooms.”
Also over the weekend, the Swiss Pirate Party brought charges against PostFinance, with Swiss federal authorities, report several Swiss media. PostFinance is the banking arm of Swiss Post. Its web site was attacked in revenge for closing an account opened by Julian Assange. The Pirate Party in early December distanced itself from the attacks, which were carried out by a group of hacker activists called Anonymous.
The party, which supports Assange, published a paper 11 December saying it believed the post office bank had acted illegally by publishing Assange’s bank account information, under Swiss banking secrecy and privacy protection laws. PostFinance noted when it published the information that Assange himself had already made this information widely available to the public and that he in fact publicized it.
Bern, Switzerland (GenevaLunch) – Swiss banks will have tougher capital requirements for trading, known as the Capital Adeqacy Ordinance, starting 1 January 2011, a year ahead of the rest of the world, the Swiss Federal Council (cabinet) announced Wednesday 10 November. New capital requirements have been drawn up by the Basel Committee of central bankers, known as Basel III, but the committee delayed the implementation deadline under pressure from countries. US Treasury Secretary Timothy Gleisner and the European Commission’s internal market commissioner Michel Barnier agreed in October 2010 to a December 2011 deadline for the new trading book rules.
Switzerland has already taken a number of protective steps in the wake of the December 2008 bailout of UBS, the country’s largest bank: higher overall capital requirements and tougher rules on liquidity were adopted for the country’s big banks in October 2010. New rules also created restrictions on bankers’ pay and a cap on the leverage ratio.
The Federal Council noted in its press release on the decision that “the financial crisis made it quite clear that the risks of loss attached to trading activity and securitization were underpinned by insufficient capital levels.
Date for compliance with special US treaty covering UBS draws near
Bern, Switzerland (GenevaLunch.com) – The Swiss Federal Council has approved four double taxation treaties, with Poland, The Netherlands, Japan and Turkey, all of which now conform to OECD requirements. The governing council of seven has forwarded these to the Swiss Parliament, which can consider an optional vote to approve the treaties. Switzerland earlier this year gave final approval to 10 0ther double taxation agreements.
The government also approved two completely new agreements, with Georgia and Tajikistan, but noting that “because a speedy entry into force of the DTAs was sought, Switzerland, Georgia and the Republic of Tajikistan agreed to waive the extended administrative assistance clause in accordance with the OECD standard for the time being.”
The five countries with veto power within the UN Security Council have agreed to tougher sanctions against Iran over its nuclear plans, and what US Secretary of State Hillary Clinton is calling a “strong” draft resolution is being circulated among the 15 members. Iran agreed just a day earlier, Monday 17 May, to a deal with Turkey that Brazil helped broker, which has it sending most of its low-enriched uranium to Turkey in exchange for enriched fuel for a research reactor, a deal similar to one suggested by other Western countries in 2009.
The US accused Iran Tuesday of trying to deflect criticism of its nuclear programme. The new, fourth sanctions package is a carrot-and-stick solution to dealing with Iran: it offers tough measures against shipping and banking, and would stop any shipments to Iran of conventional arms, but it also encourages Iran to cooperate with nuclear inspections.
Links to other sites: Aljazeera, BBC, Financial Times, Reuters/New York Times
Preventive measures but also intervention options part of new Swiss regulatory system
Bern, Switzerland (GenevaLunch) - Switzerland will not create a new tax on banks unless there is a coordinated international effort to do so. The announcement Wednesday 28 April was the latest following a series of decisions made by the Swiss government this week concerning banks and the financial sector as a whole. The accent will instead be put on bank regulatory measures to strengthen the industry’s ability to withstand financial crises. “Such measures are more effective and efficient than fiscal measures. A financial activities tax should thus be considered [only] when a coordinated international procedure is emerging.”
The government notes that “massive budgetary problems” in several countries have led to calls for more taxes on the financial sector, but in Switzerland the bailout of UBS, the country’s largest bank, resulted in a gain of CHF1.2 million for the government, not a loss. The federal government does not currently need to generate additional tax revenues, it notes, and it considers tax solutions to be an unsuitable way to manage systemic risks in the finance industry.
Swiss ministers head for Washington for joint IMF and World Bank meeting
Credit Suisse shares fall despite CHF2.05b profits
Bern / Zurich, Switzerland (GenevaLunch) – Credit Suisse and UBS, Switzerland’s two largest banks, will be subject to new liquidity rules starting 30 June 2010, part of efforts by the national bank and bank supervisory body to ensure that if the banks face a major crisis they will not pull the economy down with them. The news was announced Wednesday by the Swiss National Bank (SNB) and Finma, the supervisory body that was created in January 2009, who say the new liquidity rules are necessary to replace current ones, in place since 1988. These have not been revised significantly and “cannot ensure a level of resistance to crises for big, globally active Swiss banks, which is high enough.”
Finma and the SNB defined what they call “a stringent stress scenario” which “covers a general crisis on the financial markets coupled with a creditors’ loss of trust in the bank.
Bern, Switzerland (GenevaLunch) - The Swiss Federal Council Wednesday afternoon 14 April formally asked Parliament to approve the treaty signed with the United States in August 2009. The treaty is an agreement whereby Switzerland will provide judicial assistance to the IRS, the US tax authority in the case of 4,450 UBS clients suspected of tax fraud.
The message goes to Parliament as the country’s left and centre political parties appear to be lining up to approve the treaty, although the right-wing People’s Party insists that it flies in the face of Swiss banking secrecy law.
Record profits at UBS
Update 13:30 Zurich, Switzerland (GenevaLunch) – Swiss banking giant UBS has announced that pre-tax profits for the first quarter of 2010 will reach CHF2.5 billion. The statement was made ahead of its annual general meeting, which takes place takes place 14 April. Swiss media reports Monday indicate that the meeting Wednesday is likely to be a heated one.
This is its highest pre-tax profit since 2007.
Net client withdrawals from its wealth management units were down more than CHF15 billion from Q4 in 2009.
Institutional investors’ rep Ethos opposes remuneration and discharge agenda items
Two agenda items have prompted a group of investors led by Ethos to put up a fight at the annual general meeting Wednesday: the discharge of the board and executive committee members for 2007, 2008 and 2009 and the bank’s remuneration policy. Ethos is a UBS shareholder that represents a number of large Swiss institutional investors, notably several pension funds.
UBS announced its decision, in December, to clear the board and committee members from 2007-2009 of criminal wrongdoing, after internal and Finma (Swiss banking supervisory body) investigations into the bank’s losses and problems with the US tax office, the IRS.
Title: Lecture: Private wealth management in the new era
Location: Geneva
Link out: Click here
Description: A legal and tax chapter seminar supported by the Society of Trust and Estate Practitioners, Association Suisse-Romande. With Ivan Pictet, Chairman, Geneva Financial Centre; Philip Marcovici, CEO & Chairman, LawInContext Pte. Ltd.; and Pascal Saint-Amans, Head of the International Co-Operation and Tax Competition Division of the OECD.
Date: 2010-03-25
Background, GenevaLunch
Geneva, Switzerland (GenevaLunch) – HSBC, Europe’s largest bank, cleared up some of the confusion that has surrounded the 2008 theft of client data from its Geneva bank and apologized to its current customers at a press conference in Geneva Thursday morning 11 March. A total of 15,000 current clients, slightly less than one-fifth of its customer base of 100,000 clients in Switzerland, were affected when French employee Hervé Falciani, an IT employee, stole data over a period of several months during 2006-08, the bank acknowledged. It noted that the extent of the theft was shown to it only 3 March, a week ago, when the Swiss Federal Prosecutor gave it copies of “a substantal portion” of the stolen data. HSBC says it is now “actively contacting” clients to apologize.
Data was also stolen on additional 9,000 clients’ who have left the bank, bringing to 24,000 the total number touched by the theft. Many of those who left did not have large enough amounts to warrant a wealth management account.
Alexandria, Virginia, USA (GenevaLunch) - Details are emerging of the case of Dr Andrew Silva, who pleaded guilty 16 February in US District Court in Virginia to “conspiring to impede the United States” and to making false statements. Silva inherited $250,000 from him mother in 1997. The money, never declared to the US tax authorities, the IRS, was in a British-owned bank in Switzerland. The money grew to $268,000 by the time he tried to take the money out in 2009 when the bank said it was closing his account, a time when a number of banks in Switzerland began to close accounts held by US citizens both outside and in Switzerland. to avoid problems with US authorities.
The US Justice Department Tuesday issued a press release on his case, noting that Silva, a nose and throat specialist and surgeon, could face up to 10 years in prison and a maximum fine of $500,000. He was released on his own recognizance.
“We are capable of thwarting offshore banking schemes because of the increased cooperation among ICE, Postal Service, and the IRS,” says Neil MacBride, US Attorney for the Eastern District of Virginia says in the Justice Department release. “The tax charges in this case came to light because agents caught Mr Silva structuring cash to avoid reporting requirements, and that kind of coordination is making it possible for us to discover Americans who conceal their wealth overseas and make them pay for their actions.” Structuring cash is a term that describes bundling a large amount into several smaller ones, all under $10,000, to slip them into the US to avoid detection or without having to declare the money to customs authorities.
The Justice Department points out that “United States law prohibits individuals from structuring mailings of US currency into the United States in amounts less than $10,000 if the purpose of the structuring was to evade the requirement to file a CMIR.” The CMIR form’s longer name is: FinCen Form 105, Report of International Transportation of Currency or Monetary Instruments, and it must be filed with the US Bureau of Customs and Border Protection.
The government’s description of how Silva tried to get the money out of Switzerland:
