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:
Brady Dougan, Credit Suisse CEO
Zurich, Switzerland (GenevaLunch) – Credit Suisse says it finished the difficult year of 2009 with “resilience”: CHF6.7 billion in income, net new assets of CHF44.2 billion and a tier 1 ratio of 16.3 percent. The bank also says, in reporting its financial results Thursday 11 February, that while the average variable compensation was CHF144,000, much of the bonus money is deferred: 40 percent throughout the bank and 60 percent for senior management. Deferred awards are “subject to performance criteria, which may result in future negative adjustments.”
The tier 1 ratio indicates the state of health of a bank’s reserves.
Geneva, Switzerland (GenevaLunch) – Swiss banks take four out of the 10 top slots in Euromoney‘s annual ranking of international private wealth managers, published 8 February. The number one place this year goes to Credit Suisse, which bumped UBS out of the place it has held since the rankings were created in 1994. UBS is now third, with HSBC remaining in second place. Zurich’s Bank Julius Baer is seventh and Geneva’s Pictet is tenth. The list is created by combining performance figures with nominations; more than 1,800 nominations were received this year.
Figures published in January 2009 by the Swiss Bankers Association show Switzerland as the global leader in offshore private banking money, with 27 percent of the world market. Other top players, such as the US and the UK, continue to lag well behind.
The news that Swiss banks are still pulling in large amounts of private wealth comes on the heels of several media reports in recent days that suggest Swiss banking has taken a severe battering. The Wall Street Journal (WSJ) 31 January wrote of a “renewed assault” on Swiss banks, once it became clear that Germany was likely to buy bank client data stolen from a Swiss bank.
But the US newspaper a week later wrote that the “gloom on Swiss banks looks overdone”, saying that Germany’s threats are legally dubious and most likely designed a “ruse” to frighten clients. This plus the US-bank UBS court case in 2009 “must be seen in perspective.
Bern, Switzerland (GenevaLunch) – The Swiss government says it will assume a greater role in creating good conditions for the country’s financial institutions to continue their leading position in global finance. A report prepared by the finance ministry was accepted by the Federal Council (cabinet) WEdnesday 16 December.
Bern noted the importance that Switzerland’s financial centre plays in the country’s economy: finance contributes almost six percent to employment and 10 percent to GDP.
Among the measures the governments will implement are:
Philippe de Weck (photo: UBS)
Fribourg, Switzerland (GenevaLunch) - Philippe de Weck, who was the managing director of Swiss bank UBS from 1966-1976 and then head of the board for another four years, has died, age 90, in Fribourg. De Weck was the only head of the bank who has come from the French-speaking part of Switzerland. He remained a member of the board until 1988, after stepping down as chairman in 1980.
De Weck was one of a trio of experts called in to investigate the l’Instituto per le Opere Religiose, the Vatican’s bank, when it was faced with the Banco Ambrosiano scandal in 1982. He also served on the boards of several large Swiss companies, including Nestle and SGS.
He was born into a family that was part of Fribourg’s social set, a strongly Catholic society. His marriage to Alix de Saussure in 194 linked him to one of Geneva’s most notable Protestant families. He studied law in Fribourg and after working briefly in a law firm joined the family bank, Weck, Aeby & Cie, later bought out by Union Bank of Switzerland, which in turn merged with Swiss Bank Corporation to become UBS. The de Weck family is still active in banking today, with several members of the family involved in Geneva banks. Roger de Weck, his son, heads the Graduate Institute in Geneva.
The funeral will be Tuesday 15 December at the St Nicolas Cathedral in Fribourg.
Zurich, Switzerland (GenevaLunch) – Chairman Oswald Gruebel of UBS reportedly told a group of business leaders at a private luncheon Friday that if demands on UBS become too tough, the bank would consider locating outside Switzerland. Gruebel is said to have been referring to the possibility that Swiss banking authorities could insist the country’s two big banks, UBS and Credit Suisse, reorganize as holding companies.
The news was reported by Sonntag 29 November. Journalists were not invited to the meeting and UBS has not commented on the report.
Foreigners at top end out-earn Swiss
Neuchatel, Switzerland (GenevaLunch) - Top managers’ salaries in Switzerland have continued to rise “sharply”, especially in the financial field, since 2006, and the spread between Switzerland’s lowest paid workers and highest increased, a preliminary government statistical report shows. Well-qualified foreign workers and those with long-term C residence permits out-earn their Swiss counterparts while foreigners with lower qualifications and some border workers earn less than Swiss people in comparable jobs.
Salaries, bonuses for insurers, bankers up sharply 2006-2008
The Swiss Statistical Office Tuesday 17 November issued its preliminary report on salaries in 2008. Salaries remained mostly stable, it shows, with the financial sector an exception: salaries and bonuses both rose, with top managers’ salaries increasing 38.8 percent from 2006-2008, compared to an 11.6 percent increase for top managers in all other fields.
Zurich, Switzerland (GenevaLunch) - Swiss banks are discussing the possibility of asking some foreign clients to sign forms saying they are in compliance with their countries’ tax laws, Patrick Odier told Swiss German newspaper NZZ. Odier is head of the Swiss Bankers Association. The interview appears in the Sunday edition of NZZ. Odier, a Geneva banker who has headed the bankers’ group since September, says Swiss banks are not interested in “black gold” but in line with Swiss law they are working to find solutions to work with other countries without having an automatic transfer of client information. He also told the newspaper that his association favours a tax on interest earned that would be paid to governments – but from anonymous sources.
Zurch, Switzerland (GenevaLunch) - Bank Julius Baer joins the growing ranks of Swiss banks moving out of the US client managed wealth business. The bank announced that it has begun a gradual shift away from American customers, but the move is not hurting the bank’s overall wealth under management: the bank reports that in the first 10 months of 2009 total client assets increased to CHF234 billion and assets under management rose to some CHF 150 billion, up 17%, compared to a year earlier.
Spokesperson Martin Somogyi told GenevaLunch that details about the US client business are not available now, although the bank may provide them when it releases 2009 full year results in February 2010. He clarified that US citizens resident in Switzerland “who are tax compliant” are not part of this group and will remain bank clients.
Leman Expat Fair, Morges
Morges, Switzerland (GenevaLunch) – The Lake Geneva area has numerous business and social clubs and networking groups for the English-speaking in international population that welcome newcomers, but every autumn the region is home to two events, each of which pull in a few thousand visitors, which make it easy for new arrivals to learn more about the region.
The family-centred indoors fairs, held on separate Sundays, introduce visitors to primarily English-language services and shops in the region, from clubs to insurance and banking advice, including a host of products. The Leman Expat Fair in Morges Sunday 27 is the first of these, with 100 exhibitors in the intimate setting of the Beausobre Theatre. The second is Expat Expo, with 180 exhibitors at Palexpo, Geneva’s large exhibition space near the airport.
Both offer free admission and plenty of giveaways. Check their web sites for details, as well as the GenevaLunch events pages for times and locations.
Ed. note: GenevaLunch will be at the Leman Expat Fair Sunday 27 September. We are unlikely to be able to join Expat Expo because of a date conflict, but we support the efforts of both groups to reach out to as many members of the international community as possible.
Zurich, Switzerland (GenevaLunch) – Bank Julius Baer has acknowledged that is open to the possibility of buying the private client assets of large Dutch bank ING, reports Reuters, which spoke to the bank to clarify Italian newspaper reports that the bank is not interested. The news agency estimates ING’s private assets at $2 billion. The Dutch bank was hit hard by the global banking crisis: in January it wrote off $1.3 billion and laid off 7,000 employees.
But who will take our money to finance the mortgage?
Update 25 July 07:20 Switzerland (GenevaLunch) - Two well-known Swiss cooperative banks, Migros and Bank Raiffeisen, have made changes in recent weeks to their policies concerning customers who are US citizens, or who are resident in the US. Specifically, both banks refuse all contact from the US. The steps taken by the banks, who are best known for mortgages and retail banking to middle-class customers, are a clear indication that US pressure is having an impact on the Swiss banking system. The moves are part of a trend that saw UBS in July 2008 alert non-US citizens who were resident in the US that their accounts would be closed as it reduced its US business.
Ironically, it is Americans trying to lead normal lives and pay their bills through their banks who are most affected – not the infamously wealthy and stealthy people the Internal Revenue Service (IRS) is hunting down. Also affected: Swiss citizens living in the US and people of other nationalities who have at some point lived in both countries. These are not the mythical secret, numbered accounts made famous by the likes of James Bond, but typical Swiss bank accounts covered by data protection laws in Switzerland.
The problem is complicated for US citizens and residents living outside the US because, according to American Citizens Abroad, a Geneva-based group, US banks are increasingly applying “due diligence” rules to refuse banking services outside the country.
Lausanne, Switzerland (GenevaLunch) - Mathematicians at EPFL, the Swiss federal polytechnic institute, used a cluster of more than 200 PlayStation 3 game consoles to spend six months solving an encryption problem, breaking a previous record set in 2002. The laboratory for cryptologic algorithms cracked a 112-bit encryption based on elliptical curves. The significance of the work is that it “may serve to boost our confidence in the strength of elliptic curve cryptography (ECC),” say the authors, led Joppe Bos and Marcelo Kaihara. Encryption is widely used in banking and other industries for security. The encryption industry struggles to stay ahead of code-cracking hackers, who are using increasingly sophisticated methods and calculators.
A 160-bit elliptical curve standard is scheduled to be phased out by the industry in 2010, but the EPFL calculation shows that “for the next decade no regular user needs to be overly concerned about the security of 160-bit ECC.”
Geneva, Switzerland (GenevaLunch) – The financial sector in Geneva is likely to face a sharper increase in unemployment as of September, according to Pierre-André Berger, head of a 32-strong team specialized in banking within Geneva’s cantonal unemployment office. Berger, speaking to Swiss news agency ATS, says that the number of unemployed financial industry people rose from 500 to 1,000 between November 2008 and May 2009, but several factors coming together after the summer holiday period could have a negative impact.
Update 17:35 Geneva, Switzerland (GenevaLunch) – Several key indicators from Geneva’s cantonal employment office show that the canton’s economy slowed down significantly in the first three months of 2009 compared to last year. Industry, especially banking and hotels, has been particularly hard hit. But the watch industry promises to expand slightly in the second quarter. The cantonal office in May noted that unemployment rose 14.5 percent year on year to April 2009, although that compares to a nation-wide increase of more than 35 percent for the same period. Cantonal authorities hope for a rebound towards the end of the year.
Zurich, Switzerland (GenevaLunch) - Credit Suisse Group is confirming Q3 losses in line with the announcement made on 16 October.
Iceland’s stock market had cold water thrown on it Thursday by the government which forced trading to be suspended due to “unusual market conditions,” after it nationalized Kaupthing Bank, the third bank to move into state ownership. Financial Times
European governments, after initial disarray, have agreed on a set of seven shared principles for dealing with the financial crisis, but they failed to agree on a common policy for protecting individuals’ savings, saying only that all 27 countries have agreed to protect savings for a minimum of one year for €50,000 but some might go higher. Financial Times The British government’s imminent package to bolster banks is expected to cost £35-50 billion, with the emergency plan to “part-nationalize” the nation’s largest banks coming after Royal Bank of Scotland lost 59% of its value in two days and HBOS losing 41%. Financial Times and The Times, London
The days when a run on a bank meant savers lining up to withdraw their money might be over, thanks to the Internet, say some economists, who are talking about the new phenomenon of quiet electronic withdrawals. Fortis, Belgium’s troubled bank and insurance group, was hit in part by households who manage their finances online withdrawing money electronically.
Barclays Bank has agreed to pay $1.75 billion for Lehman Brothers North American investment banking business. Lehman filed for bankrupty on Monday after Barclays said it would not buy the entire operation.
Shares in Asia fell dramatically Tuesday after Wall Street’s worst day on Monday since the aftermath of 11 September 2001: in Hong Kong and Tokyo shares opened 5-7% down. Financial Times and Reuters More bad financial news: AIG, an insurer at the heart of the financial system, was given a $20 billion “lifeline” by the US government after its credit rating slipped, and the Federal Reserve is holding emergency meetings. FT
