ZURICH, SWITZERLAND – Switzerland’s largest bank, UBS, said Thursday 17 November that it will strip down its investment banking business and reduce its risks to concentrate on global wealth management and its private banking business in Switzerland. The restructuring was detailed at an investors conference in New York, with new chief executive Sergio Ermotti giving his first major address.
The bank now manages CHF1.4 trillion in invested assets under its wealth management businesses.
Ermotti was confirmed in his post two days ago after two months in the job as the interim CEO.
The bank will cut more than 300 jobs in addition to the 1,500-plus it announced in August, in the next four years. These will be mainly through investment banking attrition. The investment banking business will be reduced by nearly half, with the current CHF300 billion in risk-weighted assets cut by CHF145b.
The group’s capital is expected to rise as a result, to about 13 percent as a result, above the requirements of the stringent new Basel III rules.
The Financial Times points out that the bank’s new strategy parallels to some extent that of other international banks and in particular Credit Suisse, but “the two Swiss groups differ from their big international rivals in their emphasis on private banking as the central and growing part of their business.”
The bank says it plans to pay a dividend for 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.”
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.
Lausanne, Switzerland (GenevaLunch) – The University of Lausanne’s Faculty of Business and Economics, the HEC in Lausanne and the Swiss Finance Institute are joining with the Tepper Institute at Carnegie Mellon University, Pittsburgh, USA, to offer a dual-degree executive MBA in asset and wealth management. The programme starts in 2011 and offers an EMBA from the American university as well as one from the two Swiss universities.
The new EMBA programmes are designed for is designed for private and institutional investment managers, private banking relationship managers and other investment professionals.
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)
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.
Zurch, Switzerland (GenevaLunch) - Bank Julius Baer joins the growing ranks of Swiss banks moving out of the US client managed wealth business. The bank announced that it has begun a gradual shift away from American customers, but the move is not hurting the bank’s overall wealth under management: the bank reports that in the first 10 months of 2009 total client assets increased to CHF234 billion and assets under management rose to some CHF 150 billion, up 17%, compared to a year earlier.
Spokesperson Martin Somogyi told GenevaLunch that details about the US client business are not available now, although the bank may provide them when it releases 2009 full year results in February 2010. He clarified that US citizens resident in Switzerland “who are tax compliant” are not part of this group and will remain bank clients.
Zurich, Switzerland (GenevaLunch) - Julius Baer Group has agreed to buy ING Bank (Switzerland) Ltd, based in Geneva, for CHF520 million, the Swiss bank announced 7 October. The ING bank will be folded into Bank Julius Baer. The combined assets under management (end August 2009 figures) will be CHF160 billion, with the Dutch bank subsidiary’s CHF15 billion under management providing Julius Baer with a 10 percent boost to assests under management. Julius Baer’s position as the top Swiss wealth management bank is thus ensured.
ING has 310 employees, of which 80 are relationship managers, and the its addition will double the presence of Julius Baer in Geneva. The wholly-owned ING subsidiary’s business in Monaco and Jersey are included in the deal, which is expected to go into effect in early January pending regulatory approval. ING Bank is strongly capitalized, the Baer Group says, and it has a net asset value of about CHF 380 million.
Links to other sites: Julius Baer press release, Bloomberg, Financial Times
Geneva, Switzerland (GenevaLunch) – Geneva-based Pictet & Cie, one of Switzerland’s largest private banks, is the latest private bank to see its wealth management unit’s assets under management rise in recent months. Industry observers speculate this could be at least in part the result of some clients of UBS closing their accounts. A spokesperson at Pictet told GenevaLunch that global assets under management at 30 June 2009 were CHF320 billion, of which CHF230.9b are without custody. Custody accounts are generally deposited with a bank and managing them is seen to be a more administrative task than a sign of the bank’s dynamic wealth management. The bank had CHF207.6b under management without custody at the end of 2008.
Bloomberg’s Warren Giles in Geneva reports that Pictet’s increase of 11 percent shows a turn-around after a decline that began in the fourth quarter of 2007. Bloomberg contrasts Pictet’s performance with that of key Swiss private bank competitors:
Updated 22:00 with links on reactions Zurich, Switzerland (GenevaLunch) – UBS shareholders meet today, 15 April, to approve the new governing board of the bank at the annual general meeting (AGM). Before the doors opened the bank had made a pre-announcement that first quarter 2009 losses amount to nearly CHF2 billion and that it will cut 8,700 jobs, for a global workforce that will be reduced to 67,500 in 2010. Nearly one-third of the bank’s employees are in Switzerland and 2,500 of the job cuts will be in Switzerland, with 1,200-1,500 of them through layoffs. UBS says it expects to cut costs by CHF3.5 to 4 billion by the end of 2010, compared to 2008 costs.
Zurich, Switzerland and New York, USA (GenevaLunch) – UBS has sold 55 of its Wealth Management unit branches in the US to Stifel Financial, which says it is paying the Swiss bank $27 million, due in the third quarter of 2009, plus a mix of other payments dependent to some extent on performance. The group will take on at least some of UBS’s 320 financial advisors, but the exact number has not yet been determined, it says in a press release.
