Switzerland

Europe’s private banks and asset managers are facing a crisis as business models are hollowed out by negative interest rates, the chief executive of Edmond de Rothschild has warned, the Financial Times reported. Vincent Taupin, who has run the Swiss bank since March, also cautioned that neither acquisitions or attracting more money from customers offers an easy answer for the industry.

Swiss bank UBS has announced a $100m overhaul of its investment bank after profits at the division more than halved in the third quarter, contributing to an overall earnings drop despite a resilient performance in wealth management, the Financial Times reported. Pre-tax profit at the investment bank fell to $203m from $489m in the same period last year — well below analysts’ expectations for $290m.

A fleet of supercars said to have been seized by the Swiss authorities in a money-laundering investigation from the son of the leader of Equatorial Guinea was auctioned on Sunday in Switzerland, the International New York Times reported. The vehicles were among 25 luxury cars sold for more than $27 million at Bonhams auction house, according to The Associated Press, in what Bonhams called a “very special sale.” Beforehand, the cars had been estimated to bring in more than 12 million euros, or $13 million.

Lending standards in the rapidly growing loan market are deteriorating and complex financial products that mask risks to banks have parallels with the run-up to the 2008 financial crisis, the Bank for International Settlements warned on Sunday, Reuters reported. The number of collateralized loan obligations (CLOs), a form of securitization which pools bank loans to companies, has ballooned in recent years as investors hunt for higher returns by buying into loans to lower-rated and riskier companies. Like the collateralized debt obligations (CDOs) that bundled U.S.

UBS Group AG could face a lawsuit from bond investors over its role arranging a 2017 sale of Swiss franc-denominated debt for retailer Folli Follie Group that has since defaulted, Bloomberg News reported. Alcimos, a services company, has hired law firm Quinn Emanuel Urquhart & Sullivan to pursue a potential compensation case in Swiss courts on behalf of investors. Folli Follie has been struggling to survive since a short seller questioned the accuracy of its financial statements last year, triggering a bond and share price collapse.

Switzerland’s UBS plans another shake-up of its investment banking arm to help boost earnings and curb costs after tough market conditions precipitated a performance dip, Reuters reported. The world’s largest investment banks have had their worst start to a year since 2006, the latest data published by industry analyst Coalition on Thursday shows. “What’s been communicated today was a reorganisation, which did not include a specific number of job cuts,” a person familiar with the matter said, adding that the restructuring would be carried out by the end of the year.

The global trade dispute and travails of Germany’s car industry have begun leaving their mark on Swiss industry, with chemicals-specialist EMS-Chemie Holding AG citing the fallout this week, joining a number of other companies across the region, Bloomberg News reported. The euro area is Switzerland’s top trading partner, and Swiss exports to the southern German state of Baden Wuerttemberg exceed those to China. The bloc’s economy is in the throes of a slowdown that could yet get worse and Germany is possibly on the verge of a recession.

Switzerland’s thrift, contrasting with neighbors struggling to fix bloated budget deficits, is exposing the country to other longer-term problems, Bloomberg News reported. The country of 8 million runs surpluses every year and its debt ratio is far below a level that would even begin to raise alarm bells. In fact, critics warn that the aversion to leverage risks making life harder than necessary, with wide-ranging economic implications. It looks like a model of fiscal prudence in a world drowning in debt.

This time last year Sergio Ermotti was riding high. The UBS chief executive was basking in a double-digit jump in quarterly profit and boasting of the bank’s “excellent” prospects. His decision six years earlier to refocus on wealth management and slim down the investment bank looked to be paying off — the model he pioneered was copied by Credit Suisse and Morgan Stanley.  A year on and the narrative is very different, the Financial Times reported.

Credit Suisse Group AG’s recent shareholder meeting took an awkward turn when a Mozambican activist questioned Chairman Urs Rohner over the bank’s role in fraudulent deals that saddled her country with $2 billion of debt, The Wall Street Journal reported. The confrontation halfway through Friday’s meeting was the latest example of the rising international pressure on Credit Suisse to forgive loans it made to Mozambican state-owned companies engaged in an alleged complex fraud, and potentially, to pay damages to victims.