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 – Data privacy concern is increasingly raising its head in US-Swiss talks over taxes, visas and banking. The latest incident is linked to Switzerland’s decision to continue participating in the US visa waiver programme.
Parliament will have its say in US data demands for visa waiver programme
The Swiss Federal Council Wednesday 1 February made it clear it intends to move ahead with negotiations with the US in order to remain in the US visa waiver programme. Switzerland has been part of the programme since 1986 but in October 2009 the US announced that partners in the programme would have to observe two new rules, says Bern. They were told that “partner countries will be required to increase police cooperation. This will entail the conclusion of agreements about the automatic exchange of DNA and fingerprint data to prevent and to combat serious crime (PCSC) and the exchange of data about known and suspected terrorists.”
Swiss media and politicians have been speculating in recent weeks that the US has been pressuring the Swiss government to agree to the new rules and that, given Switzerland’s penchant for privacy and data protection, the Swiss government would refuse. Some 340,000 Swiss travel to the US every year and the visa waiver programme means they can visit as a tourist for up to three months without first obtaining a visa.
But Bern now says it plans to go ahead with the negotiations, noting, however, its own ground rules. The US “requires that two agreements in the security area should be finalized. The Federal Council has instructed the Federal Department of Justice and Police (FDJP) to formulate a negotiation mandate in this area. Parliament and the Cantons will be consulted before the final granting of the mandate. Data protection aspects will be duly taken into account in the negotiation of the agreements.”
Double taxation treaty talks bring up data release questions
Bern gives green light to send thousands of e-mails, but they remain encrypted
The sensitive issue comes up just as the lower house of parliament’s tax commission announced, 31 January, that Swiss President and Finance Minister, Eveline Widmer-Schlumpf had brought it up to date on US-Swiss double taxation treaty negotiations. Details were not provided except to say that the discussion covered interpretations of “judicial assistance”, a sticking point in the negotiations, and “recent demands by the US”, without elaborating on these.
Swiss-German public radio DSR reported, however, that some 4 to 6 million e-mails, mainly correspondence about banks’ commercial affairs, were being offered to the US by at least some of the 11 banks currently under investigation by the US Department of Justice—but that the correspondance is encrypted and will not be decrypted until the two countries reach an agreement. The e-mails contain the names of client advisers. The banks are suspected by the US government of helping US citizens evade taxes.
Encryption until “global solution” found
Spokesperson Roland Meier of the Federal Finance Department then confirmed to journalists the information published by DSR. He noted that until a “global solution” is found with American judicial authorities, names that are encrypted may not be released unless a legal request is made to Swiss authorities, repeating what Widmer-Schlumpf said on television, “We will only decode when we have found a solution with the United States on all the banks that are under discussion.”
A legal request would need to respect the existing Swiss-US treaty and specifically state that the actions of the person whose information is being requested is punishable under both Swiss and US law. Details, TSR, French
Analysis, in French: Martin Naville, president of the Swiss-American Chamber of Commerce, analyzed the situation in a video interview with RSR radio, “Les choses ont changé” (6 minutes, free but registration required)
Switzerland’s vocal Americans joined by even louder Canadians
Americans in Switzerland, meanwhile, are expressing growing concern about their ability to maintain bank accounts for their daily living expenses, mortgages and pensions, with Swiss banks growing more wary of them as clients given US demands for information. A particular sticking point is the Fatca (Foreign Account Tax Compliance Act) law that starting in 2014 will penalize financial institutions around the world that don’t comply by revealing the accounts of US persons to the IRS and collect tax withholdings for the IRS from them.
Switzerland’s Americans were some of the first US citizens abroad to become aware of the problem, because of Swiss data protection issues and US efforts to obtain information from Swiss banks. But Americans living in Canadai are becoming increasingly vocal in their resistance to US efforts to obtain data. The larger US expat community in Canada recently formed the Isaac Brock Society, named after Sir Isaac Brock, who prepared Canadians for war with the United States and gave his life in repelling a US invasion in 1812, according to their site.
President, head of bankers’ association, say road ahead rough for bank competivity
Swiss President and Finance Minister Eveline Widmer-Schlumpf
GENEVA, SWITZERLAND – The Swiss financial industry is facing tough times which are not likely to soon be easier, two financial leaders said at separate press conferences Thursday.
Swiss President Eveline Widmer-Sclumpf, who is also the country’s finance minister, met with journalists 12 January in Geneva to talk about the future, but the press conference not surprisingly turned to her hectic first 12 days in office.
The Swiss National Bank’s chairman resigned following a scandal, parliament moved into its new session, tax treaty talks with the US are back on the agenda after a holiday break and diplomatic posts were assigned as new ambassadors, including the European Union one, arrived to present their papers.
The financial sector will be a 2012 priority for the government
Widmer-Schlumpf says one of her top priorities is to ensure the stability and sound reputation of the financial sector. The resignation Monday of Philipp Hildebrand as central banker also left Switzerland without its important seat on the Financial Stability Board, an international body of key central bankers who have great influence over world financial policy.
Germany and the UK initialed tax treaties with Switzerland in 2011, as did several other countries (Uruguay and Taiwan in the past two weeks), and one is under discussion with Italy. The European Union opposes such bilateral agreements and has threatened to fight them. The Swiss president said Thursday that Switzerland is ready to review some of the technical issues.
US tax treaty talks: main points sorted out, more discussion needed
The most difficult discussions may be those with the US. Little information has come from either side about the status of the talks, but Widmer-Schlumpf said today that while the main points have been sorted out more discussions are needed. She qualified the talks today: “They are not easy partners, we know that, but still they are constructive.” She added that she hopes the situation can be resolved while respecting Swiss law.
The US Department of Justice is currently investigating 11 Swiss banks for possibly helping wealthy Americans in the US hide money from the IRS (tax arm) and it appears the US is putting pressure on Swiss banks in other ways, with the latest twist reportedly, according to some Swiss media, a demand for the names of all Swiss bankers who have had dealings with US citizens.
The tax talks are taking place in parallel with another Swiss-US set of negotiations, over American requests for access to Swiss police records as part of the US fight against terrorism.
Private bankers and clients face “tsunami of regulations”
Meanwhile, in Bern, the Swiss Privates Bankers Association held its annual day with the press, where President Nicolas Pictet noted that the financial industry in general and wealth management in particular are facing a “tsunami of regulations” that will increase costs and create a number of problems. Penalizing the entire profession “for the mistakes of a few” must come to an end, he argues. “We must stop making it impossible for clients to have room to breathe” – they are the first to suffer when an excess of regulations exists, with the pretext of protecting them.
Pictet did not comment on the specifics of the bank cases under review by the US. He emphasized, however, that while Swiss banks, like any other, must respect the laws of the countries in which they operate, “applying these outside a country is an unacceptable threat for a small export nation” such as Switzerland.
He was echoing concerns voiced by Widmer-Schlumpf 31 December, on the eve of her presidency, who in a radio interview offered a reminder that while banks the Swiss banks embroiled in problems with the US have not broken any Swiss laws, nor committed any moral wrong-doing, those that have broken US law will have to deal with the consequences of that. Part of discussions between the two countries involves clarifying the legal situation.
ZURICH, SWITZERLAND – The Zurich Cantonal Bank (ZKB) is closing all accounts for US domiciled clients, citing growing pressure from the US, according to Tages-Anzeiger 5 January: “The pressure from the United States on foreign banks makes the risks too high.”
Urs Ackermann, ZKB spokesman told the Swiss news agency, ATS, that the measure also affects Swiss expats living in the US.
The bank alerted the clients concerned 23 December, giving them 60 days to transfer their funds to other banks.
The ZKB and other Swiss banks have been accused by US tax authorities of helping American clients hide their taxable assets. The bank had already closed down securities portfolios of US-based clients in 2009.
Related stories:
Swiss bank Wegelin braced for “expected” fight with US, GenevaLunch 5 January
Philipp Hildebrand, Swiss central bank boss, meets journalists, GenevaLunch, 5 January (dollar currency deal affair)
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.
ZURICH, SWITZERLAND – The SonntagsZeitung, a Sunday newspaper that has often revealed political secrets, with a mixed track record for getting them right, reports today that 11 Swiss banks are being offered agreements by the US government similar to the one reached in 2009 with UBS, the country’s largest bank. The agreement reportedly would have the banks turning over, via the federal government, names of bankers, correspondence with clients and more as part of requests for administrative assistance.
Such requests are currently covered by the new (2011) Swiss-US double taxation treaty, which parliament is now reviewing, but the details as described by the Zurich newspaper go well beyond what some in Switzerland consider legally acceptable, given Swiss banking secrecy laws.
The Swiss government has said in the past month that it is talking to the US about an agreement, but for all Swiss banks, to end the piecemeal approach used by the US to date to uncover offshore assets hidden by wealthy Americans.
The story appears to be related to talks between the two governments Friday, but Reuters today notes that Mario Tuor, spokesperson for the Swiss State Secretariat for International Financial Matters, said Friday that this meeting was part of the scheduled and still ongoing talks.
Background story, GenevaLunch, 13 December 2011
Swiss retail prices have fallen 2% this year
GENEVA, SWITZERLAND – Logitech’s sale rose slightly and ABB sees healthy growth in orders and revenue, as third quarter financial reports for Swiss-based companies continue to show some resistance to pressure from the over-valued Swiss franc. Vaud-based Crea issued its revised GDP forecast Friday morning showing Swiss growth slowing from 0.7 percent this year to 0.4 percent in the first quarter of 2012.
Ed. note: TSR labels the result of Crea’s forecast a recession, but the more widely used American definition of recession calls for two consecutive quarters of negative growth.
Rare entry option into Swiss wealth management opens
Bank Sarasin, which has CHF100 billion under management, is now at the centre of an ownership struggle, reports Reuters. The bank focuses on managing money for the very rich, and its majority shareholder, unlisted Dutch Rabobank, is looking to sell for a good price, says the news agency, with Swiss banks Julius Baer and Raiffeisen leading the race.
Swiss GDP will contnue to inch up
And while the rate of Swiss growth is slowing down, GDP (gross domestic product) nevertheless will continue to rise, 1.9 percent this year and 0.8 percent in 2012, according to the BAK (Basel Economic Research Institute. Retail prices in Switzerland have reached their lowest level since 1993, according to BAK, as companies cut prices by more than 2 percent on average and margins are down.
Logitech slowly reviving
Logitech‘s forecast for its fiscal year (FY) 2012, which ends 31 March, remains unchanged, the company said in releasing its Q2 figures for FY 2012, with expected sales of $2.4 billion and operating income of $90 million. The company has moved back into the black after three months in the red: with Q2 FY 2012 sales of $589 million, up 1 percent from $582 million a year earlier, although sales declined by 2 percent year over year when favourable exchange rates are not considered. Operating income was $23 million compared to $51 million
in the same quarter a year ago. Net income for Q2 FY 2012 was $17 million compared to net income of $41 million in Q2 of FY 2011.
ABB calls last three months a “solid quarter”
Orders are up 12 percent and revenue growth 11 percent at ABB, which chief executive Joe Hogan qualified as “a solid quarter”, saying that “Our cost savings efforts again more than offset price pressure in power and we continued to build the order backlog, which will support growth in the coming quarters.”
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.
BERN, SWITZERLAND – PostFinance, the banking arm of Swiss Post, will be more directly supervised by Finma, the Swiss financial supervisory body, for compliance with the country’s money laundering act, starting in December 2011.
The move is part of the gradual shift of PostFinance to its new status as a public limited company, owned by Swiss Post, in 2013. At that point it will be fully supervised by Finma.
ZURICH, SWITZERLAND – Credit Suisse said Monday it is paying euros 150 million to settle a tax fraud dispute with the Duesseldorf, Germany tax office, heading off a court case. Switzerland’s other large bank, UBS, is reported to have lost $2.3 billion, higher than initially thought, in the fraudulent trading case that erupted last week when the bank called London police, who arrested one of the bank’s traders.
Oswald Gruebel, the head of UBS, told Der Sonntag over the weekend that he will not resign over the theft incident.
The Duesseldorf case brings to an end a saga that began with Credit Suisse offices in 13 German cities being raided after German officials from one state in 2010 bought stolen data from a Frenchman who had worked in the information technology offices of HSBC in Geneva.
Bank Julius Baer earlier in 2011 agreed to settle a similar case with Duesseldorf, for euros 50 million.
UBS announces major unauthorized trading
ZURICH AND BASEL, SWITZERLAND – In a short, last-minute statement Switzerland’s largest bank UBS says it has “discovered a loss due to unauthorized trading [...] in the range of $2 billion US dollars.
The UBS statement released to the media on 15 September says the loss happened due to “unauthorized trading by a trader in its Investment Bank”.
The statement goes on to say:
“The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of USD 2 billion.
It is possible that this could lead UBS to report a loss for the third quarter of 2011.
No client positions were affected.”
No other information has been given by the bank.
Geneva court where the case is being investigated - Photo by wrong_response in Flickr
GENEVA, SWITZERLAND – The Swiss public broadcaster Radio Suisse Romande (RSR) reports that three Al Rushaid Petroleum Investment Corp employees have been charged by the Geneva public prosecutor in a bribery and money-laundering case.
Two British nationals and one Pakistani working for the drilling division of Al Rushaid may have accepted millions of dollars in exchange for awarding valuable contracts; the funds may have then been illegally deposited in a Geneva bank.
Swissinfo reports that Al Rushaid claims it lost “hundreds of millions of dollars” because the equipment, “bought at inflated prices was often substandard or was not delivered at all, delaying or preventing the completion of contracts.”
The money, which has been blocked by Geneva judicial authorities was allegedly placed in a private Geneva bank.
Although Swiss radio declined to identify the bank, Bloomberg Businessweek says Geneva-based Pictet & Cie was sued in New York City by Rasheed Al Rushaid for “concealing their receipt of the bribe money.”
Lawyers for the accused maintain that the source of the money is not illegal. The bank, which according to Swissinfo has been questioned but not charged, also denies that the money was obtained illicitly.
Links to other sites: Swissinfo, RSR, Bloomberg Businessweek
BERN, SWITZERLAND – Switzerland and the UK initialled, as expected, a tax agreement Wednesday 24 August, under which the Swiss will collect a withholding tax in future, and transfer the money to the UK government. The agreement echoes the one drawn up between Switzerland and Germany, initialed 10 August 2011, which allows Swiss banking secrecy and privacy laws to be respected while the other governments are able to collect tax revenues.
“Both sides acknowledge that the agreed system will have a long-term impact that is equivalent to the automatic exchange of information in the area of capital income,” the Swiss statement on the agreement says.
The agreement contains special rules for non-UK domiciled individuals: persons living in the UK who do not have their permanent home there.
Swiss banks will pay a CHF500 million guarantee, to ensure UK tax authorities “a minimum income from the retrospective taxation of existing banking relationships as well as to state their resolve to implement the agreement”. “The funds advanced by the banks will be offset by the incoming tax payments and refunded to the banks.”
Capital gains of British clients subject to withholding tax
BERN, SWITZERLAND – Bank account holders in Switzerland in 2008 saw their deposits legally protected, as a temporary measure, up to CHF100,000 as part of the political fallout of the Swiss governments bailout of UBS. A series of measures were signed urgently and temporarily into law to better protect consumers. Wednesday 24 August the Swiss Federal Council signed the measures, which have seen some improvements, into law permanently.
The new law requires banks to have assets in Switzerland that will cover their obligations to account-holders, and the revised regulations carry several changes including:
- rules have been reinforced for a bank in difficulty to reimburse consumers immediately
- the ceiling for a bank’s obligation to reimburse is fixed at CHF6 billion
- additional privileges have been granted to pension funds’ investments and accounts, for their reimbursement.
A number of steps to improve the banks’ health are also part of the new law.
ZURICH, SWITZERLAND – UBS, Switzerland’s largest banks, will cut 3,500 jobs by the end of 2013, it announced Tuesday morning 23 August, in an effort to reduce expenses by CHF2 billion. The news has been expected for some weeks and, says the bank, is in line with its statement in July about costs.
The cuts are needed, says UBS, to improve operating efficiency. “Of the expected 3,500 staff reductions, approximately 45% will come from the Investment Bank, 35% from Wealth Management & Swiss Bank, 10% from Global Asset Management, and 10% from Wealth Management Americas.”
US approach contrasts with German tax collection deal
ZURICH, SWITZERLAND – There is not an official war open against Swiss banks, by the US Department of Justice, but continuing skirmishes, highlighted this week by Le Temps and the Financial Times, make it clear that peace is not around the corner, either. Officials from the two countries appear to be heading for another showdown, writes Zurich-based Haig Simonen at the British newspaper, just as Switzerland and Germany are on the verge of announcing that they have found a way forward with a similar problem of German citizens hiding money from their taxman in Swiss bank accounts.
Switzerland and Germany are expected to announce Wednesday 10 August that they have signed an agreement for the Swiss to withhold tax on Germans’ bank accounts in Switzerland while Swiss banks will pay a lump sum up front for tax revenues lost in the past by Germany. The new agreement would leave Swiss banking secrecy intact by Switzerland turning over the taxes collected without identifying account owners.
The New York Times describes the new agreement, as well as an upcoming one with Britain as putting a squeeze on tax evaders, in an article published late Tuesday.
The US is taking a more aggressive tack to uncover past tax cheats and a 2009 treaty with Switzerland covering a set number of accounts held by Americans at bank UBS looks increasingly like a one-off settlement. The DOJ 4 August announced yet another indictment, this time against Gian Gisler, a former UBS banker who left the company in 2008 and who now lives in Zurich. His indictment follows four against former Credit Suisse senior managers in late July that topped up four other ex-Credit Suisse indictments in February 2011.
According to the DOJ “While working at UBS and at two other Swiss asset management firms, Gisler had more than 38 U.S. taxpayer clients and allegedly opened and/or managed more than 60 hidden accounts on their behalf. Gisler left UBS in 2008 when it became public that UBS was the target of an IRS investigation, and moved to a Swiss asset management firm so that he could continue to assist his US taxpayer clients in hiding their accounts at other Swiss banks. When that firm ceased its private banking business, Gisler left for yet another Swiss asset management firm so that he could continue to engage in the same conduct.”
The Financial Times says six other banks, in Switzerland and Liechtenstein are now being investigated by the DOJ. “The US investigations have taken months to gather pace. But receipt of the names, along with thousands of voluntary self-declarations by US taxpayers, has widened the scope of the US inquiries. Although only 25 US taxpayers with undeclared Swiss accounts have been indicted so far – and the first case dates back to April 2009 – the pace is beginning to build.”
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.
UBS consumption indicator at its lowest level this year
ZURICH, SWITZERLAND – Swiss banking giant UBS AG warned of job losses after a strong Swiss franc and “economic uncertainty” led to a near halving in second-quarter profits.
The Zurich-based bank said it would slash costs over the next two to three years but declined to comment on how many jobs will be cut, saying only it will take a look at the restructuring later this year.
During the presentation of its second quarter results this morning, UBS said its net and pre-tax profits had dropped, and lowered its annual earning forecasts. Pre-tax profits UBS said, fell to CHF1.7 billion from CHF2.2 billion in the previous quarter.
“Having reached a high point for the year in May, the UBS consumption indicator fell significantly by 0.40 points to 1.48 in June, the lowest level this year.”
Group revenues was CHF 7.2 billion, down 14% due to “lower client activity and currency movements,” said the report.
Full report: UBS consumption indicator at its lowest level this year and UBS second-quarter profit before tax CHF 1.7 billion; Group net new money CHF 8.7 billion; tier 1 capital ratio 18.1%.
Zurich, Switzerland (GenevaLunch) - 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.”
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)
Rudolf Elmer at a press conference in Zurich 19 January
Zurich, Switzerland (GenevaLunch) – Rudolf Elmer, the former Bank Julius Baer employee who famously appeared with Julian Assange of WikiLeaks two days before his trial in Zurich for theft and threatening his former employer, has had one of his appeals turned down, his lawyer has told Swiss media in a press release.
He was convicted but given a suspended sentence 19 January for threats and theft, a lighter sentence than the prosecutor had demanded. He was then re-arrested within minutes on suspicion of breaking Switzerland’s banking secrecy laws, with which he was charged 22 January.
The appeal that was turned down 16 February was for the 19 January judgement, which did not cover banking secrecy.
He appealed, 27 January, his 22 January remand in custody for breaking bank secrecy laws by handing information to tax authorities, and this remains pending.
Elmer’s attorney, Ganden Tethong, noted in a press release 22 January that:
“The parties were informed of the court’s ruling this afternoon. In its decision, the court held that:
- there is probable cause to arrest Mr Elmer
- there is danger of collusion; in conclusion
- it granted remand.”
Switzerland’s law forbids bankers from handing data on client accounts to tax authorities unless done so at the client’s request.
Related stories in GenevaLunch:
Julius Baer nemesis reborn as Assange pal (17 January 2011)Rudolf Elmer arrested again over latest WikiLeaks handover (19 January 2011)
“Still too early” says Swiss government to say how much money is involved
EU reportedly decides today if it will follow Swiss example
Zurich, Switzerland (GenevaLunch) – Assets held in Switzerland, now or in the past, by former Egyptian leader Hosni Mubarak and his family and friends may not easily be traced, but details are beginning to surface in Bern, the Swiss Foreign Affairs Department (FAD) told GenevaLunch Tuesday.
The Swiss government announced late Friday 11 February a new ordinance requiring banks and other financial institutions to freeze assets for a group of 12 individuals in the Mubarak entourage.
“It’s still too early to provide more information, for example, the amount of money involved,” FAD spokesperson Jenny Piaget says.
The European Union is reportedly considering Tuesday if it should follow the Swiss example and move to freeze Mubarak’s assets.
The Swiss ordinance requires “persons or institutions that hold or manage assets or who have any knowledge of financial resources that fall within the scope of assets blocked” by the ordinance “must declare this information immediately to the Directorate of International Law (ed. note, part of the foreign ministry).” The declaration must provide the name of the asset-holder, the object itself and the value of assets and financial resources that have been frozen.”
Swiss bankers, others with Mubarak asset information required to alert Bern quickly
The fine for not providing information is CHF20,000 plus a fine of 10 times the value of the object, whether it is bank funds or real estate or other assets.
There has been widespread speculation about the amount of money the former Egyptian president has in Switzerland or elsewhere. The amounts estimated by some sources appear to be exaggerated, in light of the overall amounts of money that have moved between Switzerland and Egypt in recent years.
Egyptian money in Switzerland has fallen since 2005 Read more…
Zurich, Switzerland (GenevaLunch) – Swiss bank UBS moved back into profitability in 2010, ending the year with net profits of CHF7.2 billion, a turnaround from 2009 when it had a loss of CHF2.7b, and the first time since 2006 that the bank has been profitable for a full year.
The bank published its Q4 and 2010 results Tuesday 8 February.
A significant change is that the bank has begun to attract new money, after a period of outflows in the wake of the bank’s bailout by the Swiss government in December 2008, but also the bank’s problems with the IRS, the US tax authority. The US Treasury dropped charges against UBS in October 2010, after a review of more than 4,000 accounts by Swiss authorities under a US-Swiss treaty.
Net new money was CHF7.1b in the last quarter of the year, the second quarter in a row with a net inflow.
Bern, Switzerland (GenevaLunch) – Switzerland’s new law covering potentate funds, dictator’s assets frozen in Swiss banks, goes into effect 1 February 2011. The first beneficiary of what is called the Restitution of Illicit Assets Act is likely to be Haiti, which is scheduled to receive CHF6 million that have been frozen since Jean-Claude Duvalier, known as Baby Doc, fled the country in 1986.
Baby Doc’s surprising return to Haiti 17 January has provoked questions about why he would risk prosecution, and one of the suggestions put forward is that he hopes to keep the Swiss from returning money his family stashed in Swiss banks. The Duvaliers fought long and hard to force Switzerland to unfreeze their assets, saying these were legally gained. Baby Doc’s notoriously expensive lifestyle and divorce in France have sparked rumours that he is short of money.
Switzerland has struggled to keep the funds out of the Duvalier clan‘s hands for several years, cobbled by its own laws that said funds could be returned only if a country asks for judicial assistance once the dictator is gone. Haiti’s plight, a country too poor and disorganized to ask for help, underlined the shortcomings of the law.
The new law, passed in October 2010 (text), will, under certain circumstances, make it possible to return funds to a country that has not been able to follow the normal international legal path to demand their return.
Duvalier, whose motives for returning to Haiti remain a mystery, now faces charges of fraud and embezzlement.
Links to other sites: BBC, France24/AFP, New York Times
John Doe case likely to be dropped by US, says Bern
Bern, Switzerland (GenevaLunch.com) - Data is being handed over by Switzerland to the United States for approximately half of the 4,450 UBS bank accounts for which the US requested data in 2009, Bern announced Thursday afternoon 26 August.
According to the terms of a bilateral treaty signed in August 2009 Swiss authorities reviewed the bank accounts for possible evidence of fraud and delivered data in cases that met precise criteria agreed to by the two countries.
The official statement from the Federal Tax Authority (FTA) notes:
Insofar as the decisions of the FTA are legally binding, the data was supplied to the United States. This occurred in around half of the cases. Despite the delay caused by the Federal Administrative Court’s ruling, the data delivery will be largely concluded by autumn 2010.
Talks are being held between the contracting parties regarding the final stage of the agreement’s implementation. Both parties are optimistic that the US authorities will receive most of the agreed account information within a reasonable period of time and that the US authorities will definitively withdraw the civil action (John Doe Summons) brought against UBS.
UK report shows London bankers earn twice as much – even after new 50% tax
London, where bank salaries are comfortably higher than in Geneva, Zurich
Geneva, Switzerland (GenevaLunch) - Switzerland’s two big banks, UBS and Credit Suisse, have just found a new friend in the form of a report by UK-based international financial recruitment firm Selby Jennings. The report argues that fears bankers will leave London for Geneva and Zurich are “overblown”, with London’s top bank managers making twice as much as their Swiss counterparts after taxes, and that includes the new 50 percent tax on salaries over £150,000.
UBS and Credit Suisse at the time of the annual general meetings in April countered charges that they are still paying salaries which are too high by insisting they must, in order to remain competitive.
The Selby Jennings report indicates that middle management bankers are earning 15-20 percent more in London, after taxes, than those in Zurich and Geneva.
The study was summarized in the 17 May edition of the Financial Times, which cites Swiss accountants Revitrag Treuhand as saying that top bankers in Switzerland are likely to pay 41 percent of their salaries in tax.
Bern, Switzerland (GenevaLunch) – A flurry of news came out of Bern Wednesday afternoon, as the Swiss government (Federal Council) held a desk-clearing session. Bank deposits and bank supervision changes were part of the package.
Deposits insured to CHF100,000
One decision is to extend by a year the temporary measures taken during the financial crisis, to protect bank deposits, in order to allow a new law to go into effect in 2012. Insured bank deposits will thus become law for the first time.
The temporary protection amount up to CHF100,000 will be maintained by the new law, which also obliges banks to maintain 125 percent of their claims covered and other assets inside Switzerland. The total amount guaranteed has been raised to CHF6 billion and pension-related deposits will be given top priority for reimbursement in case a bank fails.
Bank supervision in leadup to financial crisis criticized
Swiss media have been quick to jump on details of a report approved by the government Wednesday, “Clarification of the actions of the Financial Market Supervisory Authority in the financial market crisis”, in particular noting that parties on the left and right were both critical of the report for not going far enough or going too far.
Zurich, Switzerland (GenevaLunch) – Former Zurich private banker Oskar Holenweger, investigated by Swiss police for seven years, has been indicted on money laundering charges linked to French engineering firm Alstom. The case spilled across borders in 2007 to Alstom’s French and UK offices, where police have investigated the company for using its Swiss subsidiary as a funnel for bribe money, reportedly some CHF70 million a year.
The Swiss Justice Department announced the charges Thursday 6 May, saying that it is dropping earlier investigations into money laundering linked to drug trafficking, which triggered suspicions about Holenweger at the start. It admitted that the case has taken far too long to reach the courts and that it was a stroke of luck, finding a document from KPMG that brought to the surface a possible link with a large French industrial company.
The accused will now go before the Federal Criminal Court in Bellinzona to face several charges:
