Switzerland

Glencore can’t afford to overpay for Xstrata

2 February 2012

The commodity trader is closing in on an all-share tie-up with its mining sister worth nearly $90 bln. Glencore could reap about $5 bln of synergies. But an immediate rise in Xstrata stock has already transferred much of this value to outside shareholders.

Swiss banking rocked to its core by tax row

30 January 2012

U.S. authorities aren’t content to chase only giants like UBS. The country’s oldest bank, Wegelin, fell victim to the crackdown and broke itself up. Though the Swiss have tried to preserve a semblance of their financial system, the anti-haven snowball looks set to keep rolling.

ABB’s $4bln low-voltage charge stacks up

30 January 2012

Buying Thomas & Betts, a U.S. maker of low-voltage kit, boosts the Swiss group’s most profitable business in the world’s biggest market. The deal looks decently priced, despite a run-up in T&B stock. And it’s grounded in good opportunities to cross-sell and cut costs.

Roche’s resolve on Illumina will be tested hard

25 January 2012

Investors reckon Roche’s $5.7 bln hostile bid for the U.S. gene-sequencer will be improved. That’s sensible: the Swiss drugmaker has sweetened deals before, Illumina is a long-term strategic bet and counter-bidders could emerge. To win, Roche may have to swallow a super premium.

Credit Suisse engineers a bonus with less promise

24 January 2012

The Zurich-based group is known for tinkering with its payout schemes. In 2008, it foisted toxic bonds on senior bankers. Its latest innovation, bonus bonds referencing the firm’s derivatives book, looks positively pedestrian by comparison. There’s certainly no obvious upside.

Hildebrand shows stark exposure of central bankers

9 January 2012

The Swiss National Bank chief has been forced out after his wife engaged in ill-advised currency trades. Hildebrand’s policies made him a political target. It’s a reminder to central bankers around the world that, to retain their independence, they have to be whiter than white.

Currency deals put Swiss central bank on the spot

5 January 2012

SNB chairman Philipp Hildebrand’s wife swapped 400,000 Swiss francs for dollars weeks before the currency was pegged to the euro at a lower rate. The bank doesn’t see anything wrong with this. But the affair leaves a bad taste, and will embolden the SNB’s critics.

Refiner’s credit crunch augurs wider pains

29 December 2011

Petroplus, Europe’s biggest independent oil refiner, may have to close plant if it can’t refinance a $1 bln credit line. Rivals may benefit if a poor result for the Swiss firm speeds reduction in refining capacity. But weak profit margins are likely to remain a widespread problem.

Warning to Rueschlikon: easy money can vanish fast

7 December 2011

The Swiss town is enjoying that something-for-nothing feeling. It has cut personal tax rates thanks to windfalls received from Ivan Glasenberg, the billionaire boss of newly listed Glencore. But as the UK has learned, such wealth can dissolve like smoke – and leave a mess.

Bagehot to cenbanks: liquidity needn’t be cheap

30 November 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 November 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 November 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 November 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 November 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 November 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 November 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 October 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 October 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 October 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 October 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.