Switzerland

Bagehot to cenbanks: liquidity needn’t be cheap

30 Nov 2011

The 19th-century British financier believed in lending freely during crises but at high rates. Wednesday’s coordinated action by the ECB, the Fed et al boosted liquidity and reduced its cost. That could worsen imbalances. A Bagehotian approach would be workable and less risky.

Swiss private bank stress forcing consolidation

24 Nov 2011

The strong Swiss franc, tax deals and market turmoil are squeezing the industry. That’s prompted Dutch lender Rabobank to weigh bids for its 46 pct stake in Sarasin. Any buyer risks culture clash and customer loss. But the benefits of size may outweigh those of independence.

UBS’s slimming strategy deserves two cheers

17 Nov 2011

The Swiss lender is halving its investment bank’s risk assets, closing units and putting its private and Swiss banking ops front and centre. It’s also cutting jobs and return targets. It’s all sensible stuff, but UBS has taken its time and must prove it can stick with the plan.

Could a UBS-CS joint venture solve Swiss problems?

16 Nov 2011

JPMorgan analysts have suggested the lenders combine their investment banks. It would boost returns, speed balance sheet shrinkage, and might pass muster with regulators wary of cross-border deals. But while consolidation is welcome, combining the arch-rivals would be tricky.

Credit Suisse loses some of its comp cred

15 Nov 2011

The Swiss bank typically sets the pace on bonuses with innovations like paying staff with toxic assets. Now, it’s caving to peer pressure and raising the threshold for deferrals. The move seems unnecessary given the weak job market and will make fewer staff think longer term.

UBS reshuffle provides management certainty

15 Nov 2011

The Swiss lender has given interim CEO Sergio Ermotti the job permanently, and is putting Axel Weber in the chair a year ahead of schedule. Both men have a lot to learn – and to prove. But as UBS prepares to unveil its new strategy, it’s good to have the top team in place.

Credit Suisse cuts necessary but not sufficient

1 Nov 2011

The Swiss lender plans to slash risk-weighted assets in its weak fixed-income business by half, and lose 1,500 more jobs. This should boost return on equity, which fell to 6 pct in the third quarter. But the bank is making some optimistic assumptions to hit its 15 pct target.

Deutsche holds firm in turbulent markets

25 Oct 2011

The German lender made a pre-tax return on equity of just 7.2 pct in its third quarter. This reflects poor trading in the investment bank. But that part of the business is gaining share. And it may now avoid having to raise fresh equity.

Credit Suisse has awkward role in Nat’s coal deal

14 Oct 2011

The bank is broker to Nat Rothschild’s mining vehicle, Bumi Plc, and lender and sometime adviser to his partners, Indonesia’s powerful Bakrie family. That’s a tricky position now the Bakries are scrambling to meet a margin call on a $1.3 bln loan - arranged by Credit Suisse.

Glencore resilience brings Xstrata deal closer

11 Oct 2011

Mining M&A’s clearest fantasy deal has inched closer to reality. A Glencore takeover of its $43 bln mining affiliate looks easier after the commodity trader’s shares held up better in the recent rout. But Xstrata investors are unlikely to roll over without a substantial premium.

Ermotti faces few credible rivals for UBS job

4 Oct 2011

The ex-UniCredit banker is interim CEO while the Swiss lender conducts a broader search. Hands-on experience, risk management, private banking charm and leadership are all required skills. Ermotti may not tick all boxes, but a bias for locals means there are few alternatives.

UBS shouldn’t wait to put Weber in the chair

26 Sep 2011

The former Bundesbank chief is not due to take over as chairman until 2013. But the rogue trading loss and departure of chief executive Ossie Gruebel has left the Swiss bank reeling. Provided his former employer agrees, UBS should put Axel Weber in charge as soon as possible.

Economists shouldn’t bask in woes of physicists

26 Sep 2011

Theorists on production and consumption, often jealous of their hard-science counterparts, may be tempted to gloat if neutrinos really do travel faster than light. But ignorance by economists is more harmful. It contributed to the financial crisis and subsequent policy paralysis.

Gruebel’s principled departure leaves UBS adrift

24 Sep 2011

The man brought in to save the Swiss bank felt the need to take responsibility for the rogue trader. But interim boss Sergio Ermotti only just arrived in April. If an estimable veteran like Gruebel couldn’t rid the deep rot from UBS, the future of the investment bank looks dim.

Swiss retain the upper hand on their currency

22 Sep 2011

The Swiss National Bank has taken to playing poker. Euro refugees and speculators still fancy the franc. So a central bank adviser has warned of another devaluation. It probably won’t come. But the threat makes it easier to keep the franc down.

No time for ritual sacrifice at UBS

22 Sep 2011

Top brass bear ultimate responsibility for the Swiss bank’s $2.3 bln trading loss. But firing CEO Ossie Gruebel or investment banking chief Carsten Kengeter would add to the upheaval. The board should concentrate on determining strategy - and plan succession accordingly.

Singapore not quite helpless over UBS losses

21 Sep 2011

The city state’s sovereign fund is understandably disappointed with its investment in the Swiss bank. The 6.5 pct stake may still come good, especially if UBS directs future business to Singapore. Even so, GIC may want to rethink the wisdom of being a purely passive shareholder.

IMF’s education remedy won’t cure rich world ills

20 Sep 2011

The fund’s flagship yearly outlook laments a jobs crisis and rising inequality in wealthy nations. But its prescription of more education spending is unlikely to do the trick. Though desirable in many ways, such outlays aren’t the golden ticket economists often claim.

UBS rogue trader a chance to test bonus clawbacks

20 Sep 2011

The Swiss bank’s $2.3 billion trading loss is big enough to wipe out its 2011 bonus pot. But a ’doughnut’ round risks a further staff exodus. Better to share the pain with shareholders, while clawing back pay from senior staff. The amount may be small, but the gesture counts.

Five questions the UBS investigations must answer

19 Sep 2011

The $2.3 bln rogue trading scandal raises questions about the Swiss bank’s cash management, internal controls, and supervision of its traders. It also points to structural flaws in the market for exchange-traded funds. Here’s what investigators and regulators should focus on.