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.
Floating exchange rates and a narrow mandate to maintain domestic price stability do not go together, says Tommaso Padoa-Schioppa, known as the intellectual impetus behind the creation of the Euro.”To have universal acceptance of floating implies an abandonment of sovereignty as strong as to accept an exchange rate constraint,” reports Reuters.
Padoa-Schioppa, a banker, former Italian Finance minister and governor at the European Central Bank, was speaking 23 September at a two-day meeting of central bankers and bank regulators at the Chicago Federal Reserve Bank to discuss the “macro-prudential” policies set up to forestall another world financial crisis. He said, “I think it’s necessary to be at least as convinced that universal floating is not the solution as one may be convinced that fixed exchange rates are not the solution.” But he concluded: “I leave to you the task of choosing a possible solution.”
Padoa-Schioppa was speaking in the wake of the post-crisis efforts by bank regulators and policy-makers to reconstruct a more resilient financial system able to withstand the shocks that the sub-prime crisis inflicted.
Links to other sites: Bloomberg, Businessweek, Reuters
The auditors who sign off on corporate accounts are a group who generally remain in the background of public debates over failures, and those who have handled banks’ book during the recent global financial crisis are no exception, but a 12 March report on Lehmann looks set to change this. Anton Valukas was appointed by a US court to provide a report after Lehmann’s 2008 bankruptcy, the largest in US corporate history. Among Valukas’s findings, detailed in the 2,200-page report: Ernst & Young, one of the Big Four accounting firms, did not live up to professional standards. The Financial Times argues that ‘the claims against E&Y, although exceptional, give grist to a growing lobby questioning the purpose of auditors in providing investors with a true picture of the financial health of a company.”
The scrutiny by world media of Ernst & Young following Friday’s report was followed Monday 15 March by the news that Saudi Arabia has pulled the auditing company’s securities license, according to the Wall Street Journal.
Links to other sites: Ernst & Young, Financial Times, Guardian/Observer, JDSUpra legal blog, New York Times, UK Reuters UK/Yahoo
Philipp Hildebrand, SNB
Geneva, Switzerland (GenevaLunch) – The incoming head of the Swiss National Bank, Philipp Hildebrand, says Switzerland needs tighter banking regulations than most countries, due to its size relative to the country’s economy. Total banking assets exceed seven times Switzerland’s GDP, he notes, and they are very concentrated, with the two big banks, Credit Suisse and UBS, having two-thirds of the total.
Recovery may be underway but the costs to the global economy, longer term, loom large. “The potential costs of the support measures taken – capital injection, asset purchases, and guarantees of bank debt – in the G7 countries together with Australia, the Netherlands, Spain and Switzerland amount to about 20 percent of GDP in these economies,” he says, although actual outlays have been about 8 percent.
Hildebrand, who takes over as SNB chairman in January 2010 when Jean-Pierre Roth retires, made his remarks in a speech Wednesday evening 18 November at the University of Geneva.
The SNB is focusing on two areas of bank regulation changes, in line with recommendations drawn up by the Financial Stability Board (FSB) The FSB was created in April 2009 and is housed at the Bank for International Settlements in Basel, Switzerland.
Not enough of this for Kuoni
Zurich, Switzerland (GenevaLunch) - Switzerland’s largest travel agent, Kuoni, said it lost CHF51 million in the first six months of 2009, against revenues of CHF26m in the same period of 2008. The global financial crisis, the economic downturn, the negative effects of currency fluctuations, and the incipient swine flu epidemic all contributed to a difficult first half.
Bern, Switzerland (GenevaLunch) – The Swiss Finance Department Tuesday 14 July published its annual figures on the financial and insurance industries, awaited with more interest than usual. The most startling numbers for 2008 show the fall in the value of client securities managed: down from CHF5,2325 billion in 2007 to CHF3,847b in 2008. The drop reflects the decline in the stock market, which at the end of 2007 had a value of CHF1,187 billion but by the end of 2008 it stood at CHF774b.
Bern, Switzerland (GenevaLunch) – Switzerland will give CHF27 million in aid to Ghana, which it cites as an exemplary sub-Saharan African country in terms of political and economic development.
Patricia Francis, Richard Newfarmer
Ndioro Ndiaye
Geneva, Switzerland (GenevaLunch) – The figures are starting to roll in and they are clear: women are being hit hardest by the economic global crisis and the way it affects them will define the longterm impact of the crisis.
Title: Discussion: Financial crisis, over or just beginning?
Location: Geneva
Link out: Click here
Description: The current financial crisis continues to have a dramatic effect on global economic conditions and forecasts. What is the real impact of the crisis on our own financial security?
A panel of specialists from the financial sector – which represent private and public banking, personal investment and corporate finance will participate in the discussion.
Panel members:
Arturo Bris – Professor of Finance, IMD
Yolanta de Cacqueray – VP Corporate Finance, Firmenich
Michel Girardin – Chief Investment Advisor, Union Bancaire Privee
James Poole – Independent Financial Advisor, Blackden Financial SA
TBD, Banque Cantonale de Geneve
Moderator:
Jim Monney, HNW Group – Union Bancaire Privee
Date: 24 Feb 2009
Global mining company Rio Tinto says from its offices in Melbourne that it will cut 14,000 jobs and “slash capital spending” in an effort to bring costs under control, but it will “hold its dividend steady.” The company has $40 billion in debt and a takeover bid in October fell through, but at least one analyst interviewed by Reuters says the company is taking the right steps.
Sony will cut about 8,000 jobs, 4% of its workforce, in an effort to save over $1 billion. The troubled firm, whose shares have fallen 70% in 2008, is making the larges job reductions to date in Asia.
General Motors, the automaking industry leader in the US, published an open letter saying it had “disappointed” consumers and that “At times we violated your trust by letting our quality fall below industry standards and our designs became lackluster.” The ad, run in an industry newspaper, is a turn-around for the company, which had previously said the financial crisis was to blame for its need for a major cash injection. The statement comes just as lawmakers in Washington were close to a deal to extend loans to the big three carmakers. DC, Reuters
The European Central Bank made “an unprecedented” cut of three-quarters of a point in its main policy rate, to 2.5%, while Britain and Sweden both cut their rates to 2% and New Zealand to 5%. Financial Times
Zurich, Switzerland (GenevaLunch) – Credit Suisse Thursday morning announced that it is cutting 5,300 jobs, mostly in investment banking and by mid-2009, as part of a series of maneuvers to reduce costs. The news, confirming rumours that have circulated this week, comes with the bank’s notice of a modest profit in November, but a loss of about CHF3 billion for the fourth quarter, due to “a significant pre-tax loss” in investment banking in October.
Zurich, Switzerland (GenevaLunch) – Credit Suisse will lay off 650 employees, 10% in its UK office, due to “worsening market conditions,” the BBC reports, but it was not alone, with HSBC announcing it will lay off 500 in the UK and far larger banking layoffs announced in the US Monday.
Zurich, Switzerland (Le Temps, Fre) – UBS shares were up Monday morning, as were shares in many markets, awaiting what they hope will be encouraging news from the UK’s budget office and Monday evening, from US President-elect Barack Obama.
Stock prices tumbled Thursday on Wall Street but Asian markets rebounded Friday as investors there banked on governments stepping up their efforts to shore up economies. Bloomberg At the centre of the banking crisis in the US is Citigroup, which has lost half its value in just four days this week. (New York Times)
Barclay’s Bank in the UK has accepted an offer from its top executive managers to waive the right to any 2008 bonuses, and the bank announced its entire board will stand for re-election in April 2009. Financial Times
Citigroup added to the gloomy economic news that started Monday with an announcement of recession underway in Japan by telling investors that it will reduce its workforce to 300,000 people but cutting 50,000 jobs. In the past four quarters, reports CNN, the bank has trimmed 23,000 jobs.
Latest reports in from McDonald’s, and forecasts from Wal-Mart, show profits for both companies despite the impact on consumers of the global financial crisis.
The world economic outlook Thursday morning was not bright, with the Britain reporting that unemployment rose from 5.4% in the second quarter of 20008 to 5.8% in Q3 (CNN, Times UK) and is likely to go higher, and Asian stocks falling lower as markets there begin to accept that a recession is underway (Reuters). In the US, Treasury Secretary Henry Paulson changed course and announced that government bailout money will be used to boost consumer spending (Bloomberg). The pound fell to a new low against the euro of £0.8356 and a six-year low against the dollar, at 1.49. (Financial Times). Meanwhile, Germany, Europe’s largest economy, officially entered a recession, according to Bloomberg.
The Bank of England’s latest quarterly report suggests that Britain’s income will shrink by one to two percentage points in coming quarters and that the country is most likely already in a recession. Financial Times
The Financial Times headline story Monday morning was that Wall Street could lose another 70,000 jobs as banks prepare their 2009 budgets, most of which will be announced at the end of November. The worldwide financial sector has already lost 80,000, says the paper.
Stock markets in Asia and London rallied after the Chinese government’s weekend announcement of a $570 billion plan to boost the economy.
The Bank of England “stunned the City and cut the base rate to a 54-year low to fight off recession,” reports The Times, London, saying that the move now puts banks under great pressure to reduce lending rates.
European central banks are expected to cut their key interest rates today, as attention turns back to gloomy economic news, including more job losses in the US, after the “excitement of Barack Obama‘s historic victory in the US presidential vote,” reports Reuters.
If there is one thing all political observers could agree on Wednesday following the election of Barack Obama as the 44th president of the USA, it is that his job will be more than challenging: the tasks are daunting. The include the first transition to a new government during wartime, overseeing a budget that has a $1.5 trillion deficit and working with other governments to end the global economic crisis. International Herald Tribune, National Public Radio,
Zurich, Switzerland (GenevaLunch) – UBS, Switzerland’s largest bank, is operating in the black again, with a third-quarter net profit of CHF296 million, “attributable to shareholders,” in line with its pre-announcement in mid-October.
Australia’s central bank Tuesday cut interest rates by three-quarters of a point to 5.25%, more than the expected half-point. The European Central Bank and the Bank of England are expected to make further cuts Thursday, as part of the global effort to prop up banks. International Herald Tribune
The Central Bank of Japan cut its benchmark overnight lending rate between banks from 0.5 percent to 0.3 percent, the first cut in seven years, joining “other central banks in moving to soften the brunt of an oncoming global recession,” writes the International Herald Tribune.
