Switzerland

Boomerang UBS boss ticks several important boxes

29 Mar 2023

Sergio Ermotti is returning as CEO after less than three years. The suboptimal governance move highlights a dearth of senior banking talent. But Ermotti’s record of shrinking an investment bank – and his Swiss passport – will be vital in the tricky integration of Credit Suisse.

Swiss CoCo litigation may have a broader payoff

23 Mar 2023

Holders of Credit Suisse’s $17 bln contingent convertible bonds think authorities were wrong to wipe them out. A legal challenge will take years. Still, Bern might decide to placate angry investors. And a fight will discourage countries considering following the Swiss example.

Credit Suisse rescue sends shockwaves far and wide

23 Mar 2023

The ailing Swiss lender was saved by UBS with a $3 bln takeover. In this Viewsroom podcast, Breakingviews columnists debate why the deal pushes up bank funding costs, how the new mega-lender affects Switzerland’s financial system, and why bank deposits are becoming less reliable.

Swiss CoCo shakeout may yet help bank regulators

22 Mar 2023

The market for quasi-equity bonds is reeling after Credit Suisse wiped out its own ones. The higher cost of issuing the securities means banks may now roll over their maturing debt, rather than replace it as per the market norm. That could actually help financial stability.

Bank woes expose gaps in EU safety net

22 Mar 2023

As the US and Switzerland scramble to head off contagion, the European Union is watching from a shaky perch. While the euro zone probably could fend off a new banking crisis, it lacks some tools for doing so. Even a backstop for insuring retail deposits remains out of reach.

Saudi is far from the last Western bank bagholder

21 Mar 2023

Credit Suisse’s rescue by UBS will cost top shareholder Saudi National Bank over $1 bln. Abu Dhabi’s ADIA and Singapore’s GIC and Temasek also caught a falling knife after buying Western banks in 2007. Politics, and the Gulf’s growing oil riches, imply further loss-making punts.

Credit Suisse reinforces Japan’s offshore anxiety

21 Mar 2023

Global bank jitters have investors looking for weak links. Japanese lenders, with staid depositor bases, are unlikely targets for bank runs, but they hold $2 trln of overseas bonds with thin profit margins. They may not dump US Treasuries in haste - but rebalance they will.

Switzerland takes CoCos to point of non-viability

20 Mar 2023

Holders of Credit Suisse’s $17 bln of contingent capital will lose the lot despite UBS paying $3 bln for its rival’s shares. The bonds boomed after the last crisis, but uncertain conditions make them riskier than bank equity. If investors flee, they’ll be less useful for banks.

UBS salvages most value from Credit Suisse wreck

19 Mar 2023

The Swiss bank is scooping up its ailing arch-rival for just $3.2 bln in a state-arranged rescue. In return for shoring up confidence it gets a balance sheet backstop, a competition waiver, big savings and a giant capital boost. It also becomes bigger and more systemic than ever.

Credit Suisse puts new dent in Swiss bank armour

17 Mar 2023

The Alpine country’s solidity is its main selling point for wealthy clients. Yet for the second time in 15 years, authorities have rushed to halt a spiralling crisis of trust at a big Zurich lender. Shoring up the Swiss financial system will only partly repair the damage.

China-Swiss stock link has flimsy foundations

17 Mar 2023

Beijing is halting mainland firms from listing shares in Zurich. Concerns that Chinese investors are buying overseas to make a quick profit at home are valid. Yet in the absence of interest from foreign institutions, such cross-border stock schemes serve little purpose.

Credit Suisse’s cash line is just a stopgap

16 Mar 2023

The lender will borrow up to $54 bln from the Swiss National Bank to boost liquidity. The move reassured investors, but won’t necessarily stop clients pulling money. Regulators and the government will need a more permanent solution, but none of them are particularly appealing.

Credit Suisse’s plight calls for outside help

15 Mar 2023

The bank’s stock fell 17% after its top investor said it wouldn’t necessarily buy more shares, citing regulatory barriers. The risk is clients flee. The Swiss National Bank’s reassuring words may help. So would a vote of confidence from a new Warren Buffett-style investor.

Clinging to Richemont is Rupert’s smartest bet

9 Mar 2023

At 72, billionaire Johann Rupert may face questions over the future of his Cartier-to-Piaget empire. Merging the $81 bln bling group with a large rival would be fiddly, and he could lose clout. Hidden value suggests holding onto it while grooming a successor is a better plan.

Swiss red carpet for China stocks rolls downhill

9 Mar 2023

Easier rules have made Switzerland a popular destination for mainland firms selling shares abroad. With battery giant CATL mulling a $5 bln Zurich offering, other European bourses will be eager to join in. Yet the long-term benefits of luring secondary Chinese listings are hazy.

Near worthless GAM still isn’t an enticing bargain

8 Mar 2023

The Swiss asset manager is trying to sell itself, after losing 96% of its market value since a bond fund scandal in 2018. A buyer would have to stomach losses and slash costs to make the numbers work. Volatile markets and the chance of losing further assets make it a risky bet.

Glencore’s coal fudge risks satisfying no one

15 Feb 2023

The dirty fuel is booming, and made up half of the $80 bln commodity giant’s 2022 EBITDA. Green investors may want CEO Gary Nagle to phase it out faster, while financially motivated ones would favour more mining. He’s doing neither, and paying the price with a middling valuation.

Syngenta jumbo IPO will sow seeds of doubt

14 Feb 2023

A Shanghai listing this year may value the pesticides and seeds maker at a chunky $66 bln. The group’s role in feeding a growing global population will please investors. But its reliance on toxic weedkillers that are losing favour in Europe poses a long-term threat.

Credit Suisse CEO tries to bail out a leaky ship

9 Feb 2023

Boss Ulrich Körner is cutting the Swiss lender’s costs and starting to hive off its superfluous bits. But clients have fled the core wealth business and traders seem to have stopped trading. Unless the business stabilises, he will have to pivot to a more radical breakup.

UBS boss Ralph Hamers has a growth problem

31 Jan 2023

Revenue in the Swiss bank’s wealth-management core slid 2% in 2022, as markets fell. Higher interest rates and China’s re-opening will ease the pain, but not for long. Hamers is running short on credible ways to get the top line moving, undermining his hunt for a valuation boost.