ZURICH, SWITZERLAND – The US intelligence company Stratfor has reportedly admitted that it was the target of an attack by the Internet pirate group Anonymous, with credit card and personal data of some 90,000 people who work for its clients affected. Among them: the Swiss foreign affairs department, several multinationals and banks.
The Stratfor site was down Monday and Tuesday 26-27 December for maintenance.
The news was broken in Switzerland by DSR, Swiss-German radio, which based its information on files of several thousand pages, a link to which was published on Twitter by Anonymous.
SION, SWITZERLAND – A massive manhunt is on for two masked men who tried to first rob one bank in canton Valais, then succeeded in robbing a second minutes later. The first attempt occurred in Réchy at 16:40, when a man robbed, at gunpoint a client of the Banque Cantonale du Valais, without getting the bank’s cash. He then fled in a dark-coloured Mercedes station wagon (Fr: break) with an accompllice.
The man was dressed in black, 175cm and normal weight.
Two hours later, at 18:10, two men waited for an employee of the same bank, Banque Cantonale du Valais, to leave the secured area of the bank’s branch in Savièse, then forced the employee at gunpoint to give them the contents of the safe. They fled with what police describe as a “substantial” amount of cash.
Police are asking anyone with information, in particular about the movements of a blue Honda Transalp with Valais plates, to phone them at +41 27 606 5656.
ZURICH, SWITZERLAND – Renzo Gadola, former UBS wealth management senior banker, was given a sentence of five year’s probation last week in Florida after he was earlier found guilty of helping wealthy Americans evade US taxes by hiding their assets in offshore accounts.
It came out in a court document, “Motion for Downward Departure From Sentencing Guidelines“, filed 15 November that he cooperated with investigators by recording meetings with clients as well as turning over the names of other bankers who are suspected of criminal activity. The document requested that he be treated leniently in sentencing because of his cooperation.
Gadola began to work with investigators shortly after he was arrested, the document notes. He is credited by US media with leading US Justice Department investigators to other bankers who have reportedly helped clients defraud the IRS through Swiss banks. The information he supplied showed for the first time that cantonal banks in Switzerland may also have been involved in hiding US clients’ money.
Former UBS banker “wishes to continue” working with US Justice Department
World’s banks are starting to wake up to the administrative nightmare it could pose
GENEVA, SWITZERLAND – American Citizens Abroad (ACA), with InterNations, a global expats social network, will be holding a fourth Town Hall meeting in Geneva Wednesday evening (16 November, 18:30-21:30, Webster University, Bellevue/GE) to address tax issues for US citizens, in particular to bring them up to date on Fatca and FBar obligations and the reported heavy penalties for non-filers. Democrats Abroad and Republicans Abroad are supporting the town hall meeting.
Ed. note: see GenevaLunch feature articles on previous town hall meetings and US overseas citizens’ tax obligations.
Fatca is the Foreign Account Tax Compliance Act. Financial institutions around the world will be obliged starting in 2014 to comply with Fatca or refuse to accept US citizens as clients. US citizens will be required to file a new, additional form that is part of the Fatca legislation starting with their 2011 fiscal returns.
Financial industry fears heavy impact of US legislation comes at a bad time
Banks around the world are starting to wake up to what Ernst & Young calls the “completely new and extended information and reporting systems” that will be required by Fatca. RiskNet recently wrote that “If the US’s proposed wide-ranging tax law comes into force, financial institutions across the globe could experience operational upheaval and enormous compliance costs, alongside potential reputational and systemic issues.”
Wednesday, the Swiss Private Bankers Association referred to “a Kafkaesque tax reform being drawn up by the USA, known as Fatca”, reflecting opinions voiced by other, non-Swiss bank groups.
CPIFinancial warned 16 November that “ll banks and life insurance companies which have US source income or handle US source income will be affected since all US source income might be subject to 30 per cent US withholding tax if they are not Fatca compliant.”
ACA goes public with campaign to repeal Fatca
ACA has launched a public campaign to have Fatca appealed. “Starting in 2014 (moved from 2013), foreign financial institutions will be required by the US government under the Foreign Account Tax Compliance Act (Fatca) to report information regarding accounts of US citizens to the IRS. This law requires foreign financial institutions (FFI) such as your local bank, stock brokers, hedge funds, pension funds, insurance companies, trusts, etc. – to report directly to the IRS all their clients who are “US persons” (citizens and green card holders living in the USA or abroad). The penalties for the institutions that do not cooperate are steep.”
Rami Schandall says in the text with a public online petition to scrap Fatca:
“IRS efforts to chase tax cheats are netting another group entirely. Americans, green card holders, and dual citizens living abroad, face the threat of prohibitive fines for simply failing to file with the IRS, when many are unaware they were required to do so. This aggressive cash grab can devastate the lives of law-abiding citizens who already pay high taxes in their country of residence.
Geneva's bankers face worrisome future in a shifting world
GENEVA, SWITZERLAND – The strong Swiss franc is back in the news 18-19 October, first with Swiss unions saying that they want the euro/Swiss franc exchange rate cap moved to CHF1.40, then the federal government announcing it will extend the period for reimbursement for partial unemployment and finally, the Geneva Financial Centre saying Swiss bankers may welll need to shift their expertise from private to institutional banking as they face a gloomy economic situation.
Bank profits will fall in 2011
Members of the Geneva Financial Center emphasized, speaking at their annual presentation for the media Wednesday, that a number of factors come together to create a worrisome scenario for the future. World markets are struggling, sovereign debt remains a major problem for a number of industrialized countries and the Swiss franc remains grossly overvalued. Profits at most banks will fall in 2011 as a result and belt-tightening will be in order, said Bernard Droux, president.
Partial unemployment due to franc: help for firms extended to 18 months
The Federal Council agreed Wednesday to extend from 12 to 18 months the period covered for companies to be reimbursed if they opt for partial unemployment as a solution in the face of the strong franc hurting their business.
The new measure becomes effective 1 January 2012.
Minimum wage should protect workers, say unions
Unia President Reno Ambrosetti Tuesday called for the Swiss franc to be capped at CHF1.40 rather than 1.20 against the euro, saying that 10,000 jobs are at stake. The major unions are calling for a minimum wage as fears grow that cheap labour will be imported at the expense of Swiss-based workers.
ZURICH, SWITZERLAND – Ratings agency Fitch says 14 October it has lowered the credit rating of Switzerland’s largest bank, UBS, by one notch, from A+ to A, citing reduced backing by the Swiss government. The change was one of scores by Fitch, with several French and British banks also targeted. The agency notes that UBS no longer has stronger government support than Swiss competitor Credit Suisse, which has a AA- rating.
The Spanish government was also targeted, but by rating agency Standard & Poor’s, which dropped the country’s sovereign debt rating from AA to AA-, citing weak growth and in particular concerns over the country’s banks. Fitch had lowered Spain’s sovereign debt rating earlier in the week.
GENEVA, SWITZERLAND – Financial credit rating agency Moody’s has downgraded by 2 to 3 notches 12 financial firms, including such big names as Lloyds TSB and RBS, citing the government’s reduced support. Bank shares immediately fell. Meanwhile, investors are pushing the European Union to draft a bank rescue plan, says Bloomberg.
Links to other sites: BBC, Bloomberg, FT, Moody‘s press release
LONDON – According to data released by the Financial Services Authority (FSA), British customers made more complaints against Barclays than any other financial institution in the UK.
Barclays was the subject of 251,563 complaints, with 53 percent of closed cases upheld in customers’ favour, the regulator’s figures showed.
Next on the list was Lloyds TSB Bank Plc and Santander UK was third.
Reuters also announced that the head of Barclays’ retail and business banking in Britain and Europe is set to leave the bank, handing the running of its core UK operations to the current head of its African business.
Link to: Reuters.
ZURICH, SWITZERLAND – European stock markets were down sharply, with falls of 4.5 to nearly 6 percent, late Thursday Swiss time, following a day of drops in Asian markets and on Wall Street.
The Swiss SMI index of top shares held up slightly better, falling by 3.5 percent mid-afternoon.
Concerns over European and especially French banks, have hit bank shares, with markets also reacting gloomily to the Wednesday on US economic growth prospects and reports that the Eurozone may be on the brink of recession.
Bloomberg reports that the MSCI All-Country World Index sank 3.9 percent and emerging economies stock markets fell the most in three years “amid concern that central banks are running out of tools to prevent another recession”.
Links to other sites: TSR, Fre, Bloomberg, Financial Times
Swiss construction and renovation is booming, thanks to low interest rates
BERN, SWITZERLAND – The current very low interest rates in Switzerland run the risk of overheating the mortgage market and Wednesday the Swiss Federal Council underscored that it considers urgent the need for measures to reinforce macroprudential management.
In particular, the government wants to ensure that the central bank and supervisory authorities have rapid access to lending data from the banks to avoid a Fannie Mae style meltdown from risky loans, with the broader impact that would have on the economy.
The Swiss National Bank and Finma, the federal supervisory body for financial institutions, are already working with the Federal Finance Department, and the working group will very soon begin to involve Swiss banks, the cabinet said in a statement 7 September.
The working group’s work is an extension of steps taken 17 August, when the government announced that banks will be required to get tougher about mortgages starting in January 2012.
Borrowers will need higher down payments to buy homes starting next year.
The group is reviewing the way in which the central bank can have rapid access to bank data when it’s not available to Finma. Current legislation may be too restrictive, the cabinet argues, and if this is found to be the case it will draw up a new legal framework by the end of the year and submit it to parliament.
“Macroprudential” is a relatively recent buzz word in the financial word, says the Bank for International Settlements, reflecting greater concern since 2008 over the impact of high risk lending on the economy as a whole. One of its earliest uses was in 1979, in a background paper prepared for a BIS working committee by the Bank of England:
“Prudential measures are primarily concerned with sound banking practice and the protection of depositors at the level of the individual bank. Much work has been done in this area – which could be described as the ‘micro-prudential’ aspect of banking supervision. […] However, this micro-prudential aspect may need to be matched by prudential considerations with a wider perspective. This ‘macro-prudential’ approach considers problems that bear upon the market as a whole as distinct from an individual bank, and which may not be obvious at the micro-prudential level.”
Background feature: “Swiss mortgage rates remain low, but market increasingly scrutinized”, 17 June 2011, GenevaLunch
BERN, SWITZERLAND – Swiss officials, like those in the European Union, say they must wait for a new United Nations resolution before allowing financial institutions to release frozen assets of Libyan dictator Muammar Qaddafi and his entourage, but several countries are meeting in Doha today, 24 August, to discuss an emergency request for $2.5 from Libya’s National Transitional Council.
The UN Security Council’s resolution in early 2011 to block Qaddafi assets led to an estimated $100 billion being frozen, in several countries, according to the Financial Times, which lists the US as the largest holder, at $37b, and the US $12, with Germany holding another $7.3b.
The exact amount frozen in Switzerland has not been confirmed by the Swiss government, but it is likely to be a fraction of the total blocked, possibly less than CHF1 billion, according to earlier figures released by the government. Libya withdrew much of the money it had in Swiss banks and other financial institutions in 2008 after Hannibal Qaddafi, the younger son of Muammar, was arrested at a Geneva hotel for attacking one of his employees.
Some German residents may now opt to walk openly through the front doors of Swiss banks
BERN, SWITZERLAND – A Swiss-German tax deal has been reached, and the details, which have provoked much speculation in recent weeks, were made public Wednesday morning by the two governments. The much-touted likely “fine” of CHF2 billion that Swiss banks would need to pay Germany turns out to be a refundable guarantee:
“In order to ensure a minimum income from the retrospective taxation of existing banking relationships as well as to state their resolve to implement the agreement, the Swiss banks have undertaken to pay a guarantee in the amount of CHF 2 billion. The funds advanced by the banks will then be offset by the incoming tax payments and refunded to the banks.”
Bern and Bonn initialed the agreement on “outstanding tax issues” Wednesday 10 August. Key features of the agreement include:
- Persons resident in Germany 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 German bank clients in Switzerland will be subject to a final withholding tax
- Proceeds of the withholding tax will be transferred to the German authorities by Switzerland
- A safety mechanism is being set up to allow Germany to request some information in order to avoid new, undeclared accounts from being opened
- A solution to the problem of the possible prosecution of bank employees is included.
Specifically, on the withholding tax, Bern says in its statement, “Final withholding tax for the future: future investment income and capital gains should be directly covered by a final withholding tax. The single tax rate has been set at 26.375%. This is in line with the current flat-rate withholding tax in Germany. The final withholding tax is a tax at source. After it has been paid, the tax obligation towards the country of domicile will generally have been fulfilled.”
German authorities will be able to submit requests for information in order to prevent new, undeclared funds from being deposited in Switzerland “in the context of a safety mechanism that must state the name of the client, but not necessarily the name of the bank. The number of requests that can be submitted is limited and there must be plausible grounds. The number will be within the range of 750 to 999 requests for a two-year period; an adjustment will then be made based on the results. So-called fishing expeditions are not permissible.”
Germans can pay lump sum back taxes anonymously or own up to accounts
The agreement notes that “To retrospectively tax existing banking relationships in Switzerland, persons resident in Germany should be given one chance to make an anonymous lump-sum tax payment. The size of this tax burden will vary from between 19% to 34% of the assets in question, and will be determined based on the duration of the client relationship as well as the initial and final amount of the capital.” Alternatively, “those affected should also have the possibility of disclosing their banking relationship in Switzerland to the German authorities.”
Germany to streamline Swiss banks’ access to German market
Switzerland has been keen to gain better access to German financial services markets and the agreement notes that “mutual market access for financial services will be improved.” In particular, “the exemption procedure for Swiss banks in Germany will be simplified, and the obligation to initiate client relationships via a local institution will be eliminated. Likewise, the problem of purchasing data relevant for tax collection purposes has been resolved.
Bern says it expect the agreement to be signed by both governments in coming weeks and notes that it “could enter into force at the start of 2013″.
Michael Ambühl, State Secretary, Swiss Federal Department of Finance, and Hans Bernhard Beus, State Secretary, German Federal Ministry of Finance, were the lead negotiators, who initialled today’s agreement.
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 – PostFinance, the financial arm of Swiss Post, continues to pull in new customers as the country’s two large banks cope with the fallout from legal problems with the US and a strong franc that is hurting their revenues. PostFinance Wednesday 27 July announced that it acquired 43,000 new customers in the first half of 2011 and 103,000 new accounts, bringing the totals to 2.7m customers and 4.2m accounts.
Customer assets totalled CHF90 billion.
Profits rose nearly 20 percent to CHF327 million and the company created 130 fulltime jobs, with plans to add another 50 before the year ends.
The positive performance contrasts sharply with gloomy news from the country’s two big banks. UBS Tuesday 26 July announced a 49 percent drop in revenues due in large part to falling income from investment banking’s weak performance with stocks bonds, commodities and currencies. The bank plans to cut costs, which will mean job losses, by up to CHF2b in the next two to three years.
Credit Suisse announced 15 July it is being investigated by the US Justice Department, which has indicted eight former employees for helping wealthy Americans hide money in Switzerland. The bank announces its first half 2011 results tomorrow, 28 July.
News follows rumours of two big Swiss bank staff cuts
ZURICH, SWITZERLAND – Credit Suisse issued a statement Friday that it was formally notified 14 July that it is being investigated by the US Department of Justice (DOJ) for helping wealthy Americans avoid paying taxes through undeclared offshore accounts.
Four Credit Suisse bankers, only one of whom is still with the bank, were named earlier this year by the DOJ as the target of investigations, and Credit Suisse said it was cooperating with US authorities.
The new investigation follows one by the US government that led to UBS providing the names of more than 4,000 US clients under the terms of a special treaty between Switzerland and the United States.
The bank’s official statement:
As previously disclosed, Credit Suisse has been responding to requests for information, including subpoenas, in an investigation by the US Department of Justice (DoJ) and other US authorities.
The investigation concerns historical Private Banking services provided on a cross-border basis to US persons. As part of this process, on July 14, 2011, Credit Suisse received a letter notifying it that it is a target of the DoJ investigation.
It has been reported that the US authorities are conducting a broader industry inquiry. Subject to our Swiss legal obligations, we will continue to cooperate with the US authorities in an effort to resolve these matters.
Ed. note: the Financial Times carries a lengthy story with background
Rumors have been flying all week that both Credit Suisse and UBS are planning large job cuts, with the Financial Times saying Friday that sources close to the situation back this up, but for the moment both banks are refusing to comment on the stories.
New reports shed some light on Geneva housing prices
ZURICH, SWITZERLAND – The Swiss National Bank 16 June joined the chorus of cautious voices warning of real estate markets overheating in some urban areas in Switzerland and the risks a sudden sharp economic downturn, not to be excluded despite current economic growth, could pose for banks as well as property owners. The central bank has begun a quarterly survey of Swiss banks’ risk levels.
“In response to signs of imbalances developing in the Swiss mortgage market and to the high uncertainty over the banks’ true risk exposure, the SNB has intensified its monitoring of the mortgage market. For this purpose, at the beginning of 2011, it launched a comprehensive quarterly survey of banks. The survey results will be a key tool for analyzing the vulnerability of the Swiss banking sector, and assessing
the need for further policy measures.”
The carefully crafted words of the SNB’s Financial Stability Report 2011, published 16 June, don’t paint a dramatic picture, but the report does raise flags, even as luxury property reports aimed at buyers outside Switzerland, such as one issued by the New York Times 16 June, paint a rosy picture that overlooks the larger
Cheaper housing: Geneva’s Swiss are buying in Annemasse
Neighbouring France is benefitting to some extent from the high franc and housing shortage situation. Le Temps reports today that 40 percent of the new relatively low-cost housing complexes being built in Annemasse, on the border, belong to Swiss people.
The managing director of a large retail store in the Nyon area told GenevaLunch Thursday that “retailers here are suffering. It’s not catastrophic but it’s not good. We read about how well the economy is doing, but we don’t see it. People are shopping over in France, understandably, with the low euro.”
Interest rates held at low 0.25%
Geneva's old town: a nice place to live, for those who can afford it
The good news for homeowners is the SNB’s decision on interest rates, which will be kept at 0.25 percent for three months, continuing the expansionist monetary policy of the past two-plus years. The central bank notes, however, that the current situation cannot continue for another three years, with low interest rates to fuel the money supply, coupled with a high Swiss franc, in the context of a very mixed economic growth picture in Europe. “Strong growth in the emerging markets and positive developments in Germany and Switzerland contrasted with economic weakness in several other European countries”, in 2010, the report warns.
Swiss market stable except for Geneva, Lausanne region
Swiss residential real estate prices show marked differences, with Wuerst and Partner‘s October 2010 quarterly report on the Swiss market showing 60 communes at risk for real estate bubbles, while the market overall remained “stable”.
The latest report from the company, issued in May 2011, says stability has continued, with one significant exception: “residential rents are expected to continue to remain generally stable. The one exception is the Lake Geneva region: This region is currently experiencing the strongest population growth throughout Switzerland, whilst at the same time residential construction activity has remained moderate in comparison with the rest of the country. Consequently, rents in this region are expected to trend further upwards in the foreseeable future.”
The housing supply rate stabilized in the first quarter of 2011, Wuerst figures show, but the asking price for all residential property in Lausanne and Geneva continued to climb, the only area in Switzerland where this was the case.
Sales prices in Lake Geneva area rose 10% and more: CHF2.26m on average in Geneva
Source: Swiss National Bank, 16 June 2011 (click on image to view larger)
ZURICH, SWITZERLAND – Put the Swiss banking crisis in the past tense, with the Swiss National Bank’s new report on the state of Swiss banking showing that in 2010 the gross profit for the country’s 320 banks was CHF18.9 billion, a roughly 50 percent improvement over 2009.
The aggregate balance sheet for all Swiss banks in 2010 rose by 1.7% to CHF 2.71 billion.
The overall figures hide a significant difference, with 53 banks showing a loss, four more than in 2009. The loss was mainly due to a “substantial depreciation of tangible assets amounting to CHF 9.4 billion”, says the SNB.
The big banks played a key role in the improvement, says the SNB in a statement issued Thursday 16 June. The data “shows that this result was significantly influenced by the big banks, which reported improved trading income, higher extraordinary income and an increase in depreciation of tangible assets.”
Swiss franc’s appreciation reduced value of foreign balance sheet items
BERN, SWITZERLAND – A Swiss spokesman for the new State Secretariat for International Financial Matters (SIF), Mario Tuor, has confirmed that Switzerland and the US have been holding “informal talks” to explore solutions to the problem of undeclared assets held by Americans in Swiss bank accounts, but he told Reuters Friday 10 June that many of the details appearing in the media jump the gun and can’t be confirmed.
The rumours have been flying for the past two days, with Reuters, Bloomberg and the New York Times vying for scoops and exclusive information and ultimately giving credence to the stories. The newspaper quotes three unnamed sources; US government officials leaked the information to the newspaper that the two countries were expected to come to an agreement in July: “As part of the agreement under discussion, known as a global resolution, US government agencies would invite the banks to pay a fine, exit their undeclared offshore banking businesses for Americans, and turn over client names to the Internal Revenue Service (IRS) and the Justice Department.” In exchange, says the paper, In exchange, “the agencies would drop an ongoing investigation into the banks.”
US officials have often in the past used the New York Times to leak information and their position, in advance, on Swiss-US tax and financial discussions.
Tuor told Reuters that “the two sides had exchanged ideas but that he could not confirm the July date, whether the two sides were eyeing a multi-bank solution, or any other details mentioned” in an article published Thursday by Reuters. “‘There were several sets of talks, one of which was on the sidelines of the IMF’s spring meeting and was about the Fatca, though ideas were also exchanged about finding a solution for the past,’” Tuor told the news agency.
Fatca is the Foreign Account Tax Compliance Act adopted by the US at the end of 2010, which goes into effect in 2013, and which will require non-US banks to provide the US with considerable data on the accounts of Americans and foreigners with US assets. The goal is to catch people who are illegally avoiding pay US tax.
A side effect of the US adopting Fatca, however, has been a growing reluctance on the part of banks in Switzerland in particular, but also banks elsewhere, to keep US citizens or foreign residents in the US as clients. Some accounts have been closed, creating a string of financial management problems for people who are not hiding from the IRS.
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 – Switzerland moved Wednesday 18 May to align itself with the European Union in blocking the assets of 13 Syrian leaders and forbidding them to enter or transit Switzerland.
The sanctions are accompanied by an arms embargo, in response to serious human rights violations by the government of Syria against its own citizens, also bans the export of all military goods and other goods that could be used for military purposes, and the use of any financial tools that facilitate military deliveries to Syria. A detailed list of goods was published by Bern.
Swiss cities, Geneva included, are home to enormous wealth, not all of it legitimate
Bern, Switzerland (GenevaLunch) – For the first time since Switzerland set up its Money Laundering Reporting Office (MROS) in 2002, the number of “suspicious activity reports” (Sars) passed 1,000 in a year. The Swiss Federal Police office reports 28 April that in 2010 the total number of Sars was 1,159, a 29 percent increase over 2009.
FATF assessments of Swiss action on money laundering
Switzerland has been tightening its money laundering laws and stepping up preventive measures since the late 1990s, with a review in October 2009 by the inter-governmental Financial Action Task Force (FATF) showing good progess made since a 2005 review pointed out a number of weak spots.
Switzerland was accepted in 2009 into the FATF system of regular two year reviews, with the next one set for October 2011. It was commended on several points, including its improvements in the system to quickly identify assets of politically exposed persons, mainly dictators.
Switzerland has been particularly sensitive on this score, and in early 2011 was quick to freeze assets of people linked to Egyptian, Tunisian and Libyan regimes.
Weaknesses that were pointed out by FATF in 2009 included extending to a larger group the obligation to submit Sars: lawyers, insurance agents, real estate dealers among others.
One of Switzerland’s biggest problems, the task force said, is clearly identifying real owners when property is purchased or insurance contracts bought, with a third party acting for the owner.
Terrorism money laundering “more or less the same” in 2010 as in 2009
Terrorist financing was shown in only four cases, the new federal police reports indicates, although the number of Sars linked to terrorism jumped from 7 submissions in 2009 to 13 in 2010. Ten of these were forwarded by the MROS to the Swiss attorney general’s office, but six “had no hard evidence of terrorist financing”, the federal police say.
One complex case accounted for eight of the Sars and one case alone involved CHF19 million of the CHF23m total assets for the 13 Sars submitted. All in all, “the situation in 2010 remained more or less the same as in the previous year.”
Financial institutions reported 71% of cases
Bern, Switzerland (GenevaLunch) - The Swiss Federal Council has adopted the legislative recommendations presented in 2010 to strengthen the financial sector by addressing systemic risks of big banks through what are known as “too big to fail” measures.
The measures adopted on 20 April are designed to prevent the state from having to use tax revenues in order to bail out systemically important banks such us UBS and Credit Suisse.
According to the new bill:
“By 2018, systemically important banks should build up more capital, meet more stringent liquidity requirements and improve their risk diversification. Moreover, they should be organised in such a way that a national economy’s systemically important functions are ensured even in the event of threatened insolvency.”
While the costs for systemically important banks will increase in the short term, the report says, investor confidence will increase over the long term, constituting a competitive advantage for Switzerland’s financial centre and the institutions affected.
The implications for domestic lending are considered to be minor.
Background, GenevaLunch: New recommendations on “too big to fail” issue
Lausanne, Switzerland (GenevaLunch) – Several robbers on mopeds stole an unspecified sum of money after attacking the teller at the Raiffeisen Bank in Granges-près-Marnand, a village of 1,200 people 10 km from Payerne, near the A1 autoroute. One of the thieves carried a gun, another a long object.
The robbery occurred at 10:30 Friday morning 8 April, when the teller was alone.
The teller was beaten and threatened, although the injuries did not require hospitalization.
Police say the group escaped on mopeds, two of which carried Valais plates but had been stolen in canton Vaud. The alarm was raised immediately and a large team of police from the canton but also surrounding communities, including dogs and their handlers, failed to turn up the robbers.
Laurent Gbagbo joins Tunisia’s deposed president Ben Ali in losing access to Swiss assets
(Update 15:45 Bern, Switzerland (GenevaLunch) – Former President Ben Ali of Tunisia, toppled by a popular revolution that forced him to flee the country 14 January, will not be able to touch any assets he may have in Switzerland, effective immediately. The Swiss president, Micheline Calmy-Rey, who is also the foreign affairs minister, made the announcement Wednesday morning 19 January at a press conference.
Ben Ali’s “entourage” is including in the process to block assets, should illicit funds be found.
Ben Ali’s and entourage’s possible real estate: no sales
Real estate sales of any property that may belong to him are blocked as well, to avoid funds leaving the country in order to get around the freeze.
The government did not confirm that Ben Ali actually has assets, whether bank accounts or real estate, although Calmy-Rey says there is evidence that people close to Ben Ali have made several trips to Switzerland in recent months. Bank have been on the alert and closely following events, with a legal obligation to alert the federal government if they noted suspicious account movements.
Switzerland has increased its banking surveillance and more closely tied it to political events in recent years, following problems freezing some dictators’ assets because the government did not move quickly enough or work closely enough with banks.
Federal Council will consult on plan for how big banks can fail, negotiate withholding tax on foreigners’ accounts
Measles, tougher penal sentences, electricity suppliers, corporate tax rates all on the 2011 schedule
Swiss Federal Council (cabinet): government publishes its 2011 agenda
Bern, Switzerland (GenevaLunch) – The Swiss Government, fresh from the defeat of its counter-initiative in the vote on foreign convicts 28 November, has set out an ambitious agenda for work it expects to complete in 2011. This will be the final session before a new parliament is elected 23 October 2011.
Two pieces of legislation, one calling for a tougher penal code and the other for greater efforts to integrate foreigners into Swiss society, were planned before the weekend vote, but they must now be coordinated with a constitutional change, the results of the 28 November popular initiative, where Swiss voters chose automatic expulsion of foreign convicts.
Negotiations over undeclared assets in Swiss banks confirmed
The council confirmed Tuesday that negotiations are already underway with some countries, and it intends to open negotiations with other key countries, to “regularize” undeclared assets coming to Swiss banks from outside Switzerland. The main tool Switzerland intends to use is a withholding tax but the government says the negotiations will also include a commitment by the Swiss to “ensure, as far as possible, that undeclared assets from [countries with negotiations] will not in future come to Switzerland”.
Bankruptcy proceedings for key banks would limit pay, free trade agreements get priority
The cabinet will consult with interested parties on the details of how banks that are critical to the national financial system would be allowed to move into bankruptcy if they fail. A particular aspect of this is the decision by the government to limit payment to bankers for any financial institution that comes under the government’s care. Wide consultation on drafts for new laws with major impact is standard procedure in Switzerland and proposed legislation is then revised based on feedback before it goes to parliament.
Trade talks to be accelerated
Swiss banks’ stress tests shows “both banks would still have a solid capital base” in case of global recession
Basel, Switzerland (GenevaLunch.com) – Credit Suisse and UBS, Switzerland’s two large banks, would both have capital ratios of at least 8 percent, should they be subject to stresses from a global economic recession, Finma, the country’s financial regulatory body, said Friday evening 23 July.
Finma published the results of its stress tests on the two banks, conducted since 2008, in parallel with announcements by the European Union and 91 of its largest banks about the results of EU bank stress tests.
Seven of the 91 European banks failed the stress tests, five “caja” or savings banks in Spain, Germany’s Hypo Real Estate and Greece’s ATE bank, a result that led, according to the Financial Times, to investors signalling “their distrust of the assumptions underlying the tests and the surprisingly small number of banks to fail the tests.”
Finma explained in publishing its results that the stress tests were developed with the Swiss National Bank, the country’s central bank. “Analyses of this kind are a key component of its normal supervisory activities. Finma requires Credit Suisse and UBS to have sufficient excess capital and liquidity to enable them to absorb unforeseen events at any time. The large banks should therefore have a tier 1 ratio of at least 8 percent even under such stress scenarios. If this requirement were not met, Finma would work with the institution in question to consider reducing its risk positions and/or strengthening its capital base and then instruct suitable measures.”
The stress tests check the banks’ capacity to deal with specific scenarios. “The latest scenario covers different regions of the world over a two-year period. It assumes a global recession, accompanied by a slump in prices on the financial and real estate markets,” Finma says in its press release. “Developments in Europe have also been added, with specific and very sharp shocks assumed for some European countries. In view of UBS and Credit Suisse’s relatively low exposure to these countries, however, the impact of these particular shocks turns out to be small.”
Swiss banks subject to Finma stress tests, uncertainty over when results will be announced
Zurich, Switzerland (GenevaLunch.com) – Europe’s financial sector is waiting anxiously for the results of stress tests for banks, which have been conducted by the European Union on 91 banks. The results will be announced in a staggered fashion starting at 17:00 Friday evening 23 July, by the European Central bank and the banks themselves. Switzerland’s two largest banks, Credit Suisse and UBS, are outside the stress test system, but stress tests on them have been conducted by Finma, the Swiss financial regulatory body, and there is a widespread sense that Switzerland’s parameters are even more stringent than those of the EU.
It’s unclear if and when Finma will release these results but according to the Financial Times, which cites “people familiar with the regulator’s plans” Finma will “definitely come out with results to coincide with the EU publication.”
The stress tests were created in the wake of large bank failures or near-failures in the past two years. They provide a set of parameters to test a bank’s ability to withstand market stresses.
One result, in Switzerland, of the stress tests and the financial sector crises of recent months has been to draft new regulations covering banks’ capital adequacy and risk diversification. The changes are open for consultation until 20 August.
Protestors make their presence felt in Toronto in worst of a week’s clash with police
There won’t be a master plan that all G20 countries will follow to ensure economic recovery: the group of the world’s 20 largest economies met in Toronto over the weekend and agreed that a diversified set of solutions makes the most sense for global economic recovery. Overall, however, they agreed to halve European government’s deficits by 2013 and to push for higher capital requirements for banks.
Protestors clashed with police Sunday 27 June, the worst in a week-long series of marches and meetings against world leaders’ management of their economies. The Toronto Sun reports that what started out as a peaceful march by 4,000 people suddenly turned into a riot, with police cars set on fire and heavy destruction of buildings and other property.
Links to other sites: Bloomberg, Financial Times, Toronto Sun
Video, Reuters
©2010 Chappatte, distributed by Globe Cartoon. More cartoons on Chappatte’s web site. Geneva-based Patrick Chappatte works for the International Herald Tribune, for Geneva newspaper Le Temps, and for NZZ am Sonntag. All cartoons reproduced with permission.
The Irish government Tuesday 30 March announced a series of measures to prop up its ailing banks, which have not yet come out of the global financial crisis. AIB shares were down 20 percent and Bank of Ireland shares fell by 10 percent. The popularly dubbed government “Bad bank” took over €81 billion in bad housing loans Tuesday, about one-fifth of Ireland’s bank loans, while political debates centred on the growing nationalization of the banks.
Links to other sites: Financial Times, Irish Times
