Infinite Unknown

It has been a hard year for the biggest Swiss bank, UBS. After losing millions in the US sub-prime mortgage market, it has had to beg the Swiss government for help. As Imogen Foulkes reports, its reputation in Switzerland may never recover.

Swiss shareholders are angry that the value of their shares has plummeted

In Zurich, UBS head office sits astride Paradeplatz - Parade Square to you and me.

But in recent months, the Swiss have renamed it Piratenplatz - or Pirate Square - to signify what they believe is the daylight robbery that has taken place over the last 12 months. Not of their biggest bank, but by it.

When the news began to trickle out that UBS was in big trouble because of its exposure to sub-prime mortgages, there was first surprise, then concern, and then finally, as the multi-billion pound extent of the losses became clear, fury.

I remember going to an emergency shareholders meeting earlier this year.

Touch their money and the Swiss get mad Bernhard Weissberg Blick newspaper

UBS has thousands of small shareholders, mostly relatively well-off, mostly elderly, and none of them expecting the value of their shares to be cut in half in a few short months.

Huge bonuses

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Tags: Economy, mortgage crisis, Mortgages, Switzerland, UBS

Swiss banking giant UBS, under investigation by the U.S. government for allegedly helping Americans hide money from the Internal Revenue Service, is closing thousands of accounts, putting clients at greater risk of being exposed, tax lawyers say.

UBS clients have been receiving calls and letters telling them that their Swiss accounts will soon be liquidated. Those who have concealed funds from the IRS have two basic choices: They can take new and potentially difficult steps to hide the money, heightening their risk of being caught and punished severely, or they can come clean, lawyers say.

The backdrop for UBS’s action is that the U.S. government has been pressing UBS and the Swiss government to disclose the names of thousands of Americans with undeclared accounts, while the Swiss have vowed to uphold Swiss legal protections for bank clients.

However, as a practical matter, whether or not the Swiss formally give up the names, UBS’s decision to close the accounts undermines Switzerland’s legendary code of bank secrecy, lawyers said.

“I think the bank’s actions here are likely to compel clients to come out into the open,” said Scott D. Michel, an attorney with the law firm Caplin & Drysdale. “It is a step in the direction of the erosion of bank secrecy,” he said.

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Tags: Banks, Economy, Government, IRS, Politics, Switzerland, U.S., UBS

The Justice Department today announced that a senior Swiss banker has been indicted on charges of conspiring to defraud the U.S. government by helping about 20,000 U.S. clients hide $20 billion in assets from the Internal Revenue Service.

The indictment of Raoul Weil alleged that he conspired with a host of others at his bank, overseeing a business that employed encrypted laptops, numbered accounts and counter-surveillance techniques to help American clients conceal their identities and evade taxes.

Weil oversaw the bank’s cross-border business that catered to U.S. clients, generating about $200 million a year in revenue for the bank, the Justice Department said in a news release.

The announcement did not name the bank, describing it only as a large Swiss bank with offices worldwide.

A report on UBS’s Web site says an executive name Raoul Weil was head of UBS’s wealth management international business between 2002 and 2007. The indictment says the Raoul Weil charged in the case was head of the unnamed Swiss bank’s wealth management business from 2002 through 2007.

Weil was named chairman and chief executive of UBS’s global wealth management and business banking operations in 2007, the UBS site said.

Other bank executives “at the highest levels of management” are unindicted co-conspirators, according to the indictment.

The action announced today is part of a larger clash between the U.S. government and the tradition of secrecy that has been central to Switzerland’s lucrative banking industry.

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Tags: Banks, Economy, Government, IRS, Justice Department, Politics, Switzerland, U.S., UBS

Rep. Rahm Emanuel (D-Ill.) with Sol Schatz of the VFW, Thomas Lonze of the State of Illinois, James O’Rourke of the American Legion and Sen. Dick Durbin discussing the Welcome Home GI Bill. (Photo courtesy of congressional website)

(CNSNews.com) - President-elect Barack Obama’s choice for White House chief of staff is one of the biggest recipients of Wall Street money in Congress, according to a Washington, D.C.-based “money-in-politics” watchdog group.

The Center for Responsive Politics has issued a report highlighting millions of dollars in campaign contributions that Rep. Rahm Emanuel (D-Ill.) has raised from individuals working in the hedge fund industry, private equity firms, and large investment firms.

Emanuel has raised more money from individuals and political action committees in securities and investment businesses than from any other industry.

This comes after a presidential campaign that saw Obama frequently criticize Wall Street and blamed lack of government regulations for the economic crisis that hit the country in mid-September.

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Tags: Barack Obama, Bill Clinton, Citigroup, Goldman Sachs, Government, hedge funds, JPMorgan, Morgan Stanley, Politics, Rahm Emanuel, U.S., UBS, Wall Street

NP Paribas Chief Executive Officer Baudouin Prot speaks during a news conference to announce the bank’s third-quarter results in Paris November 5, 2008.

PARIS (Reuters) - A raft of European bank results did little to lift gloom around the sector on Wednesday, with a recurring trend of falling profits and rising bad debts stemming from the global financial crisis.

France’s biggest bank BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) posted a 56 percent fall in third-quarter profits, Allied Irish Banks (ALBK.I: Quote, Profile, Research, Stock Buzz) cut its earnings forecast, and Greece’s Emporiki Bank (CBGr.AT: Quote, Profile, Research, Stock Buzz) swung to a loss.

Capital rebuilding continued in the face of a tough outlook as Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) looked to raise up to 3 billion pounds ($4.7 billion) from a government-backed bond, and Austria’s Raiffeisen Zentralbank said it may ask the government for 2 billion euros ($2.6 billion).

By 7:15 a.m. EST the DJ Stoxx banking index was down 0.7 percent, led by 4 percent falls for BNP and Allied Irish.

Profits have tumbled across the sector, and several banks have warned of more writedowns and rising bad debts this year, though there is optimism that government rescue packages have left balance sheets strong enough to withstand more losses.

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Tags: ABN Amro, Banks, BNP Paribas, Commerzbank, Economy, RBS, UBS

Oct. 23 (Bloomberg) — Protesters blocked UBS AG’s private banking branch on Zurich’s Paradeplatz as hundreds gathered in the Swiss financial center to seek curbs on executive pay after the country’s largest bank was forced to ask for government aid.

Dozens sat on the steps of the bank’s entrance from midday shouting “return bonuses!” and waving red flags at bystanders and TV cameras. Unia, Switzerland’s largest trade union with more than 200,000 members, said about 1,000 people protested in front of UBS headquarters at an after-work rally.

“UBS shouldn’t be allowed to just continue this way,” said Olivier Vogel, a 24-year-old politics student at the University of Zurich and a member of the Social Democratic Party’s youth organization, which organized the protest. “If the bank won’t come around, there will be more actions.”

UBS’s $59.2 billion government aid package, announced last week, has prompted a popular backlash against executive pay in a country where tax evasion is not a crime and local governments offer tax breaks to lure millionaires. The bank paid about 12.5 billion francs in performance-related compensation for last year.

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Tags: Banks, Economy, Switzerland, UBS

Pedestrians walk past a branch of the UBS bank in Bern, Switzerland, on Thursday, Oct. 2, 2008. Photographer: Adrian Moser/Bloomberg News

Oct. 16 (Bloomberg) — Switzerland gave UBS AG, the European bank with the biggest losses from the credit crisis, a $59.2 billion rescue and pushed Credit Suisse Group AG to raise funds, joining authorities around the world in shoring up banks.

UBS will get 6 billion Swiss francs ($5.2 billion) from the government and put as much as $60 billion of risky assets into a fund backed by the central bank, the Zurich-based company said. Credit Suisse Group AG raised 10 billion francs from investors including Qatar and Tel Aviv-based Koor Industries Ltd.

Switzerland is the last of the world’s financial centers to pour cash into ailing financial institutions after losses on bad debts reached $647 billion globally and credit markets froze. The Swiss government plans to raise deposit guarantees and is ready to back the short- and medium-term interbank loans of the nation’s banks, after countries across Europe took similar measures.

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Tags: bailout, Banks, central bank, Credit Crisis, credit crunch, Credit Suisse, Economy, financial crisis, Government, Henry Paulson, Politics, Swiss National Bank, Switzerland, Treasury, U.S., UBS

Credit Crisis Widens

Sam Farhood, left, and James Denaro work on the floor of the New York Stock Exchange prior to the Opening Bell in New York, on Oct. 6, 2008. Photographer: Andrew Harrer/Bloomberg News

Oct. 6 (Bloomberg) — Stocks tumbled around the world, the euro fell the most against the yen since its debut and oil dropped below $90 a barrel as the yearlong credit market seizure caused bank bailouts to spread. Government bonds rallied.

The Standard & Poor’s 500 Index retreated 5.9 percent, extending the worst weekly slump since 2001, as concern slower global growth will curb demand for commodities sent Alcoa Inc. and U.S. Steel Corp. down more than 7 percent. The MSCI Emerging Markets Index headed for its biggest loss in at least two decades and exchanges in Russia and Brazil halted trading. Europe’s Dow Jones Stoxx 600 Index had its steepest decline since 1987.

Today’s plunge erased about $2.5 trillion from global equities after the German government was forced to bail out Hypo Real Estate Holding AG, overshadowing the $700 billion U.S. Treasury plan to revive credit markets. The euro weakened 6 percent against the yen, the most since 1999.

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Tags: bailout, Banks, BNP Paribas, Brazil, Dow Jones, Economy, Fed, Federal Reserve, George Bush, Government, Hypo Real Estate, Lehman Brothers, Politics, Standard & Poor's, Stock Market, Treasury, U.S., UBS, Wall Street

WHEN I drove to the Beverly Hills offices of Drexel Burnham Lambert on Feb. 13, 1990, the last thing I expected to hear was that the investment bank where I worked was going under. Yet early that morning, we were told that the company was filing for bankruptcy. I was, to put it mildly, blown away. At the time, Drexel had $3.5 billion in assets and was the biggest underwriter of junk bonds.

It all seemed like a very big deal at the time. But what’s happening this week makes me pine for the good old days.

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Tags: AIG, Credit Crisis, credit crunch, Economy, Fed, Federal Reserve, Lehman Brothers, mortgage crisis, Mortgages, Politics, rating, Standard & Poor's, Stock Market, UBS, Wall Street

Physical demand for gold is surging but the price keeps taking serious knocks. What’s happening.

LONDON - Gold market manipulation conspiracy theorists should be having a field day.  The past few weeks have seen solid evidence that physical gold demand from individuals is soaring. We have seen the U.S. Mint having to suspend one ounce Gold Eagle coin sales because of what it terms ‘unprecedented demand’, Indian gold sales have picked up enormously in the past few weeks leading to purchasers having to wait several days for deliveries as the traditional sellers are short of gold, while yesterday we hear that Abu Dhabi, a major trading centre for precious metals, has seen gold sales rise by 300 percent in volume and 250 percent in value in August compared with a year ago.

According to a Reuters report quoting Abu Dhabi Gold and Jewellery Group Chairman Tushar Patni “It was the best month the market has seen in almost 30 years and it compensated for any drops we have seen earlier this year.  We had never expected that if gold fell below $800 an ounce we would see a 300 percent increase in volume and 250 percent in value, especially as many buyers are abroad on holiday.”

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Tags: Abu Dhabi, Economy, Gold, India, Inflation, manipulation, market manipulation, Mint, Oil, U.S., U.S. Mint, UBS