Zurich, Switzerland (GenevaLunch) - UBS’a annual report, published Monday 15 March, stoked the fire under a debate in the lower house of Swiss parliament over limiting executive pay packages. Thirteen top managers at the Swiss bank were paid CHF68.7 million in 2009, of which nearly CHF55 was in the form of bonuses, and the bank spent another CHF41.3 paying former managers a mix of compensation.
The figures were nearly 10 times those for 2008, when the bank turned to the government for a bailout package.
The bank two weeks earlier, 1 March, announced losses for a third quarter running, and the details about payouts come just as the lower house of the Swiss parliament has been debating putting a cap on executive pay.
More Swiss banking news:
- Swiss National Bank and Finma supervisory body will work more closely
- UBS says IRS has eyes on 20 Swiss banks
Zurich, Switzerland (GenevaLunch) - Swiss bank UBS has told Swiss German newspaper Tages-Anzeiger that it sent letters to several Swiss politicians early in the week to encourage them to approve an agreement between Bern and Washington, DC that now goes to parliament for a vote.
Bern / Zurich, Switzerland (GenevaLunch) – Marcel Ospel has told Swiss magazine Blick that he is ready to appear before a Swiss commission to answer questions about the debacle of the bank he headed two years ago, UBS. He has refused to comment or answer questions from political bodies since he left the bank in April 2008.
Political parties have begun wrangling, widely expected in Switzerland, over the US-Swiss agreement which covers UBS providing information to the US about 4,450 client accounts. Parties on the left are lining up to approve it only if pay caps are placed on bankers’ salaries, while the centre-right is arguing in favour of Parliament approving it, to secure the future of Switzerland as a financial centre.
Geneva, Switzerland (GenevaLunch) – Swiss banks take four out of the 10 top slots in Euromoney’s annual ranking of international private wealth managers, published 8 February. The number one place this year goes to Credit Suisse, which bumped UBS out of the place it has held since the rankings were created in 1994. UBS is now third, with HSBC remaining in second place. Zurich’s Bank Julius Baer is seventh and Geneva’s Pictet is tenth. The list is created by combining performance figures with nominations; more than 1,800 nominations were received this year.
Figures published in January 2009 by the Swiss Bankers Association show Switzerland as the global leader in offshore private banking money, with 27 percent of the world market. Other top players, such as the US and the UK, continue to lag well behind.
The news that Swiss banks are still pulling in large amounts of private wealth comes on the heels of several media reports in recent days that suggest Swiss banking has taken a severe battering. The Wall Street Journal (WSJ) 31 January wrote of a “renewed assault” on Swiss banks, once it became clear that Germany was likely to buy bank client data stolen from a Swiss bank.
But the US newspaper a week later wrote that the “gloom on Swiss banks looks overdone”, saying that Germany’s threats are legally dubious and most likely designed a “ruse” to frighten clients. This plus the US-bank UBS court case in 2009 “must be seen in perspective.
Zurich, Switzerland (GenevaLunch) – Fourth quarter profits for 2009 were CHF1.205 million, says Swiss bank UBS, offering investors a brighter face after months of gloomy news about its financial results and legal problems. The figure was three times that projected by analysts contacted by Swiss news agency AWP. It leaves the bank with a loss for the year 2009 of CHF2.74 million, from a loss of CHF21.30m in 2008. The company published the figures Tuesday morning 9 February.
All business divisions reported a pre-tax profit. The improved performance, after four straight quarters of losses, was due to cost-cutting and efficiency, with fixed costs reduced to CHF20.2 billion, “broadly in line with the CHF20b target set for 2010″ the financial report indicates.
IRS sets up Global High Wealth Industry Group, seeks joint audits with other governments
UBS boss says governments must sort it out
by Sean Ecker with Ellen Wallace
Bern, Switzerland (GenevaLunch) – The Swiss government meets Wednesday 27 January to review the impact of a court’s decision last Friday, which asks the Federal Tax Administration to review the case of at least 25 UBS bank clients whose names were slated to be handed over to US tax authorities. The court ruled that a client’s failure to supply a bank with the American tax W9 form does not in itself constitute fraud (Ed. note: the US penalty for failing to supply the taxpayer identification number form is $50).
The court decision raises questions about the 4,450 names Switzerland has agreed to review for the IRS tax authority: people who are suspected of having committed tax fraud, as opposed to tax evasion.
Bern, Switzerland (GenevaLunch) - The finance commission of the Swiss Parliament’s lower house agreed Thursday 21 January to set up a special investigative commission to review decisions made by Swiss authorities concerning UBS. The new commission will review decisions made by the Swiss Federal Council, the Swiss National Bank and Finma, the financial system supervisory body, in three areas: the UBS bailout in the contect of the financial markets crisis, changes to supervisory regulations covering UBS and the decision by Finma for UBS to release client data to US tax authorities.
Zurich, home to banking thrillers
Zurich, Switzerland (GenevaLunch) – Call them whistleblowers if you believe their consciences have overcome them, or thieves if you think they’ve broken the law. Whatever the label, people who take client data from Swiss banks that employ them, then offer the information to another government, are suddenly back in the headlines.
French officials told Swiss news agency ATS Thursday evening 21 January that France has handed back to Switzerland data stolen by a French citizen. It made the announcement a day after the Swiss Finance Department said it would not provide administrative assistance to countries in cases where stolen information was used. France told ATS it has kept copies of some of the information, for its own investigations.
The data was stolen from British bank HSBC in Geneva, by Frenchman Hervé Falciani. The case came into the public spotlight late in 2009.
Switzerland is reviewing its legislation with an eye to setting clearer limits for handing over data to a treaty partner when it demands assistance in suspected tax fraud cases.
US newspaper says whistleblowers “chipping away” at bank secrecy
Falciani was not the first bank employee to pocket data. American Bradley Birkenfeld stole UBS client data in 2008 and gave it to the US tax authority, the IRS in a case that has had a major impact on the bank’s reputation and which badly strained US-Swiss relations.
To believe the New York Times 19 January, Swiss Rudolf M Elmer has just become the first whistleblower of 2010, a man who “is chipping away at the centuries-old traditions of Swiss banking secrecy,” in line with Falciani and Birkenfeld.
Finma appeals to Supreme Court
Bern, Switzerland (GenevaLunch) – Switzerland’s financial market supervisory authority, Finma, has decided to appeal to the country’s supreme court in the UBS client data case. A lower court had found it acted wrongly in ordering UBS to turn over the names of 300 of the bank’s US clients to the US tax authorities in February 2009.
Finma’s board voted 21 January to take its case to the Federal Supreme Court, saying it (Finma) “is using the opportunity to have Switzerland’s supreme court pass judgment on the extent of the Financial Market Supervisory Authority’s legal latitude in crisis situations.”
Taking a bite out of Swiss bankers' bonuses
Taking a bite out of Swiss bankers' bonuses
Credit Suisse cuts bonuses to pay UK tax, UBS told by Finma to reduce payout
Migros takes in former big bank clients
Zurich, Switzerland (GenevaLunch) – Switzerland’s two largest banks will be paying out bonuses, but the amounts are shrinking. Credit Suisse, has told several media 19 January that its overall bonus pool will shrink by 5 percent as it reduces payouts to senior managers to cover the new UK bank tax. The UK has announced it will levy a 50 percent tax on bonuses over £25,000, a one-time charge. Some 400 senior managers in the UK will have their bonuses cut up to 30 percent, Bloomberg reports.
Bern, Switzerland (GenevaLunch) – The Swiss government is not likely to introduce a special tax on Swiss banks, the Swiss Federal Department of Finance (FDF) says. It has taken note of US President Barack Obama’s intention to introduce a special levy on the 50 largest financial institutions in the USA in order to recover some $90 billion over 10 years, but it says that Switzerland’s financial system bore up well during the crisis and no public funds were lost.
Bern, Switzerland (GenevaLunch) – The Federal Council, Switzerland’s cabinet, has stepped into the debate over a ruling by the Swiss Administrative Tribunal, announced 11 January, that the Swiss banking supervisory body had no legal right to tell bank UBS to hand client names to US tax authorities. The Council made it clear 13 January that it played a key role in the decision by Finma, the banking authority, to agree the names should be given, outside the usual procedures called for by a bilateral judicial assistance treaty with the United States
UBS looks to ethics code to guide bankers’ behaviour
Court ruling against supervisory body opens door to client lawsuits
Zurich, Switzerland (GenevaLunch) – UBS, one of Switzerland’s two large banks, has issued a new code of conduct aimed at its employees and its board of directors, noting that the “Code defines the way UBS does business.” The document is the company’s latest effort to turn itself around after significant outflows of client funds under management, both in Switzerland and abroad, and sluggish share prices for over a year.
UBS operations in the United States were seriously compromised after it admitted to the US Justice Department that it had encouraged some US clients to evade paying taxes. UBS paid a $780 million fine as a result, in an agreement signed in February 2009.
One of its former US wealth division managers, Bradley Birkenfeld, has just begun a 40-month prison sentence in Pennsylvania for the same crime.
Profits likely up, reputation “most valuable asset”
Analysts have been reporting this week that UBS appears to have a profit in the final quarter of 2009, the first in more than a year, but the bank has declined to comment. It will post 2009 results 10 February.
In the new code’s preface, Chairman of the Board Kaspar Villiger and Group CEO Oswald Gruebel say that “in the new UBS we will uncompromisingly treat our reputation as our most valuable asset and we will protect it fiercely.”
Geneva, Switzerland (GenevaLunch) - Juergen Homann, 67, a New Jersey businessman, was fined $600,000 and given five years probation by a US District Court judge for hiding $6.1 million from the IRS, US tax authority, and for not declaring offshore accounts. Homann could have been imprisoned for up to five years but the court acknowledged that he had been very cooperative, in particular in identifying lawyers and bankers who had helped him hide the money, according to Business Week magazine.
”In pleading guilty, Homann admitted he failed to disclose his secret Swiss account to the Internal Revenue Service on tax returns from 2001 to 2007 and didn’t file separate reports for his offshore account. UBS disclosed data on Homann’s account to the IRS under its deferred-prosecution agreement,” reports Business Week.
Background, GenevaLunch
Links to other sites: Business Week, New York Times
Bradley Birkenfeld (photo: National Whistleblowers Center)
Miami, Florida, USA (GenevaLunch) – UBS manager turned informer Bradley Birkenfeld will go to prison 8 January after a judge turned down his appeal for clemency Monday 4 January. US District Judge William Zloch also refused to consider further appeals, reports Swissinfo, in a feature on the impact of Birkenfeld’s case and that of a French former HSBC employee. Both have given their governments information on clients held by banks based in Switzerland, a crime under Swiss law.
Birkenfeld has argued that he should not be sent to prison because he brought the IRS, US tax authority, information on some 19,000 clients. But prosecutors have argued that “he failed to disclose his own crimes”, says Swissinfo.
His request to receive whistleblower awards that could amount to several million dollars is under consideration by the IRS Whistleblower Program. The National Whistleblowers Center’s attorneys have been representing Birkenfeld. They issued a statement 30 December calling on all Americans to write to the attorney general to stop Birkenfeld going to jail, saying it will send the wrong message.
Links to other sites: US National Whistleblower Center, Swissinfo
New York, NY, USA (GenevaLunch) - Bradley Birkenfeld, the former UBS bank wealth manager who shared 19,000 bank client names with the IRS, US tax authority, appeared on CBS television Sunday night, lamenting his prison term. Birkenfeld is scheduled to go to prison 8 January to begin serving a 40-month prison sentence for his part in defrauding the IRS. He could exit prison a wealthy man thanks to rewards from the IRS Whistleblower programme. He told the television interviewer that he believes it is unfair he should be the only banker to go to prison in connection with the case.
Background, GenevaLunch
Links to other sites: CBS 60 Minutes show, TSR (Fre)
Miami, Florida, USA (GenevaLunch) – Bradley Birkenfeld, the former UBS wealth manager in the US who set off a court case between the US tax authority, the IRS, and Switzerland’s largest bank, says he is ready to give more evidence. Birkenfeld, who stands to benefit from the IRS Whistleblower programme, is scheduled to go to prison 1 January to start serving a 40-month sentence. He has asked a Florida court to delay the start of his sentence in exchange for cooperating more extensively with the IRS, reports Swiss news agency TXT/TSR.
Background, GenevaLunch
UBS New York headquarters
Zurich, Switzerland (GenevaLunch) – There will be no trial of the current and former heads of Swiss bank UBS, the Zurich prosecutor’s office announced Tuesday 15 December. Shortly afterwards, the UBS board announced that it would not press charges, either, against unnamed former senior executives. Swiss politicians have been calling for someone to take responsibility for the most serious banking debacle in Switzerland’s history.
The possibility that the bank might have collapsed at the end of 2008 in the wake of the US sub-prime catastrophe moved the Swiss government to inject billions of Swiss francs into the bank. The public prosecutor in Zurich said that in the case of the sub-prime losses and cross-border case that pitted UBS against US tax authorities, there was no evidence that Swiss law had been broken.
Philippe de Weck (photo: UBS)
Fribourg, Switzerland (GenevaLunch) - Philippe de Weck, who was the managing director of Swiss bank UBS from 1966-1976 and then head of the board for another four years, has died, age 90, in Fribourg. De Weck was the only head of the bank who has come from the French-speaking part of Switzerland. He remained a member of the board until 1988, after stepping down as chairman in 1980.
De Weck was one of a trio of experts called in to investigate the l’Instituto per le Opere Religiose, the Vatican’s bank, when it was faced with the Banco Ambrosiano scandal in 1982. He also served on the boards of several large Swiss companies, including Nestle and SGS.
He was born into a family that was part of Fribourg’s social set, a strongly Catholic society. His marriage to Alix de Saussure in 194 linked him to one of Geneva’s most notable Protestant families. He studied law in Fribourg and after working briefly in a law firm joined the family bank, Weck, Aeby & Cie, later bought out by Union Bank of Switzerland, which in turn merged with Swiss Bank Corporation to become UBS. The de Weck family is still active in banking today, with several members of the family involved in Geneva banks. Roger de Weck, his son, heads the Graduate Institute in Geneva.
The funeral will be Tuesday 15 December at the St Nicolas Cathedral in Fribourg.
Zurich, Switzerland (GenevaLunch) – UBS says it has completely lifted a travel ban it implemented in April 2009 for its client managers, reports Nasdaq. They were told not to travel abroad following an order from Finma, the bank regulatory body, for UBS to revamp its cross-border business policies.
UBS also announced Monday 7 December that it is nominating, to one of its 12 board positions, Wolfgang Mayrhuber, chairman of the board and CEO of Lufthansa airline.
Zurich, Switzerland (GenevaLunch) – Chairman Oswald Gruebel of UBS reportedly told a group of business leaders at a private luncheon Friday that if demands on UBS become too tough, the bank would consider locating outside Switzerland. Gruebel is said to have been referring to the possibility that Swiss banking authorities could insist the country’s two big banks, UBS and Credit Suisse, reorganize as holding companies.
The news was reported by Sonntag 29 November. Journalists were not invited to the meeting and UBS has not commented on the report.
Basel, Switzerland (GenevaLunch) – The Miami offshoot of the Basel Art fair has since 2002 been a place where wealthy clients and would-be customers of Swiss bank UBS could expect to be lavishly wined and dined in carpeted tents. The bank is the main sponsor of the US version of the contemporary art show in Switzerland, of which it is the sole sponsor. This year UBS has canceled what Bloomberg regards as its signature extravaganza event.
Bern, Switzerland (GenevaLunch) – “There is no guarantee that the IRS will have 4,450 names” when Switzerland finishes reviewing the 4,450 UBS bank accounts identified according to the criteria established by the United States and Switzerland, Folco Galli of the Swiss Federal Justice Department told GenevaLunch Wednesday 18 November. There is also no reason to believe the number will be close to this – or, on the other hand, far smaller. The US ambassador to Switzerland, Donald Beyer, last week commented that he expects the number to be far smaller, while the New York Times appears to have erroneously implied 17 November that Switzerland must turn over this many names to the IRS.
”At the moment, no one knows,” Galli says, because the accounts and names are being reviewed, a process that will take a year. And no one knows how many, if any, of the 14,700 individuals who came forward to the IRS under the amnesty programme, are part of the group of 4,450 UBS accounts, since those account holders are currently all known only to the bank itself. UBS, as part of the agreement, is filtering the identified accounts based on the governments’ criteria in order to turn data over to the federal administrative review.
Update 20:25 Bern, Switzerland (GenevaLunch) – The Swiss government will not automatically hand over details of UBS accounts to the IRS, the US tax authority, without giving account owners a chance to defend themselves, Bern announced Tuesday 17 November: if Switzerland’s tax authority decides to turn over information to the IRS, account holders will first be notified and given a “chance to state their case.”
The announcement appears to be at odds with a remark attributed by the New York Times to Douglas Shulman, IRS commissioner, at a press conference held in New York Tuesday. He is reported to have referred to “‘the obligation that the Swiss have taken to the US government to produce 4,450 names’ to the IRS, he said.” But Switzerland says it will review the 4,450 accounts agreed upon and make a legal decision in each case about providing assistance to the IRS.
The Swiss government and the IRS Tuesday separately announced details of the process covered by their agreement, signed in August, concerning 4,450 UBS accounts where the IRS has asked for assistance as it chases tax evaders. Switzerland says the UBS affair will cost the government CHF40 million, with a team of some 40 legal and tax experts working fulltime for a year to decide in which of the cases Switzerland will provide assistance. Additional help from specialists will be called in if necessary.
The IRS’s Shulman also announced that more than 14,700 people had come forward under a tax amnesty that ended 15 October, for non-compliant taxpayers, well over the 100 or so who turn themselves in, in most years. He noted that the IRS case brought against UBS in 2008 will be dropped only if the US tax authority receives the names of 10,000 UBS clients, either through Swiss assistance or by the clients turning themselves in. The taxpayers who took advantage of the amnesty were from several countries and from many banks.
Tax adviser Gregory Dean of US Tax & Financial Services in Geneva Tuesday evening cautioned that “We should not lose sight that the voluntary disclosure programme still exists – the special programme promoted by the IRS closed October 15, but this has created the wrong impression that people can no longer come forward under the voluntary disclosure programme. This programme still exists, though the IRS approach to a post-October 15 disclosure is a little uncertain. What is certain is that voluntary disclosure is not available where the IRS has initiated an investigation of a taxpayer.”
Ed. note: The documents which make up the annex to the agreement between the two countries are available, but only in German, on the federal government’s web site.
Highlights of the agreement
Zurich, Switzerland (GenevaLunch) - Bank UBS says it needs three to five years to move back into profitability and show a CHF15 billion profit before taxes. The figure was provided as part of several medium-term goals the bank announced Tuesday morning 17 November before the bank began a day-long information session with investors. The bank noted, as well, that outside observers have overstated the impact of European tax amnesties: “CHF435 billion of total European invested assets, approximately one-quarter, represents cross-border private client assets in countries neighboring Switzerland and in the UK.
