Switzerland

The Swiss economy is expected to suffer its biggest contraction since the mid-1970s this year and recover only slowly in 2021, the government revealed in a bleak new outlook, Bloomberg News reported. The State Secretariat for Economic Affairs in Bern slashed its forecast on Thursday, saying the economy was expected to shrink 6.7% in 2020, faring worse than it did during the financial crisis. That’s because in addition to the downturn globally, private consumption in Switzerland would face headwinds from rising unemployment and people’s uncertainty about the future.

Credit Suisse Group AG was stung by the collapse of Luckin Coffee Inc. in China following an accounting scandal, which led to a five-fold increase in Asian loan-loss provisions, Bloomberg News reported. The Swiss bank set aside 97 million Swiss francs ($100 million) for soured loans, primarily related to three cases, the largest of which was Luckin Coffee, according to a person familiar with the matter. The bank only referred to a “Chinese food and beverage company” in its earnings statement Thursday.

Swiss-based sporting goods group Intersport’s main franchisee in Sweden has filed for a court-led restructuring as it seeks to avert bankruptcy in the face of falling sales because of the COVID-19 pandemic, Reuters reported. Intersport AB, which employs about 2,000 people, said in a statement on Tuesday that it needs temporary relief from creditors to weather the downturn after a sharp decline in sales left it without adequate cash to pay all of its bills. “This is an extraordinary measure ...

The Swiss watch industry has survived lickings before, but Rolex, Omega and Cartier now face a combination of economic punches putting them back on their heels, Bloomberg News reported. The industry was just adapting to the downturn from political protests in its largest market, Hong Kong, when the coronavirus outbreak hit. Now as China’s economic slowdown is set to engulf the rest of the world, the strong Swiss franc, surging gold prices, and store closures are set to saddle companies like Swatch Group AG and Richemont with higher costs.

The Genevan jeweler De Grisogono SA, known for extravagant diamond jewelry worn by the likes of Paris Hilton, filed for bankruptcy, ensnared in a corruption probe involving Isabel dos Santos, the daughter of Angola’s former president, Bloomberg News reported. De Grisogono couldn’t secure a buyer despite talks that lasted several months, the company said in a statement on Wednesday. The failed negotiations forced the company to file for creditor protection with Swiss authorities, which if accepted, will affect 65 jobs in the nation, the company said.

Credit Suisse has hit back against Mozambique in a case in Britain’s High Court, arguing a government guarantee for a $622 million loan - part of a $2 billion debt scandal - is valid and that it is entitled to claim damages, Reuters reported. Mozambique sued the investment bank last year, alongside a number of other defendants, in a bid to cancel the guarantee and seek compensation for losses related to the debt saga, which tipped its economy into crisis. Credit Suisse rejected Mozambique’s arguments in its defense papers and submitted a counter claim, dated Jan.

An influential global watchdog has warned that the vast market for leveraged loans has become increasingly vulnerable to shocks, in a move that could heighten regulatory scrutiny of the risks surrounding corporate debt, the Financial  Times reported. The Basel-based Financial Stability Board said in a report on Thursday that the recent rapid growth in leveraged loans — credit for lowly rated, more indebted companies — has been accompanied by a weakening of protections for lenders that has not been fully priced into markets.

Schmolz + Bickenbach AG’s shareholders voted in favor of a capital increase to keep the company afloat after the two largest investors ended weeks of feuding over the proposal, Bloomberg News reported. Almost 80% of shareholders attending an extraordinary meeting near the Swiss city of Lucerne approved the share sale plan of at least 325 million Swiss francs ($326 million), removing a key hurdle towards rescuing the company from insolvency.

An investment holding company linked to Russian billionaire Viktor Vekselberg pledged to invest “as much money as necessary” in Schmolz + Bickenbach AG to avert a restructuring of the ailing Swiss steelmaker’s $800 million debt pile, Bloomberg News reported. Liwet Holding AG, which holds a 26.9% stake in Schmolz, said in a statement Sunday that the pledge is conditional on there being no change in control of the company.