After the UBS debacle, The Smurfs took advantage of the vacuum in the market, and entered the market with their own brand of private banking. Private will soon mean "UNDER YOUR BED"
As an ex-UBS man, I am distraught. These are dark days for UBS and the Swiss banking sector in general. First, we had UBS’s dalliance with the US market end in utter betrayal. UBS, an essentially conservative private bank at heart, wanted a piece of the global investment banking action. They ploughed money into building a huge US network and got into all kinds or risky endeavours. The only thing they forgot to pack before they set off on their endeavour, was a modicum of good risk management. It is a well known fact that the Swiss are an admirable nation whose sense of probity, austerity and realism is peerless. They are however not known for taking risks, hence their excelling in private banking. It therefore stood to reason that a risk-taking swashbuckling UBS US investment banking operation would be akin to a thin crust Italian pizza put together by a sauerkraut chef from Leipzig, namely without soul.
For UBS, falling back on its private banking expertise and experience would make more sense. Then, to add insult to injury, or in Swiss terms, to rub salt into their chocolate, the US government takes action against UBS over the fact that the latter allegedly helped US citizens evade taxes in the US.
http://www.iht.com/articles/2009/02/20/business/ubs.php
Reading some of the details, I am really at a loss as to what some of my ex-colleagues (I was at UBS, but not private banking, as I was considered neither obsequious nor sycophantic enough) were thinking when they engaged in some of the acts they are accused of. Apparently, Swiss private bankers created a code to deal with their client in their communications so as not to leave incriminating evidence should the US authorities get hold of the documents. So “orange” stood for the Euro currency, while “blue” stood for sterling. A “nut” apparently stood for USD250,000. Now if I remember right, you have to have many multiples of that amount to be accepted by UBS private banking as a client. This would render both the clients and their bankers technically “nuts”. In fact it makes me wonder whether the Swiss were ever good at secrecy, if these laughable attempts at code and cypher were their idea of subterfuge. The secret services of Smurfs (an equally small nation) would have done a far better job.
Bond never trusted the Swiss bankers with his money, opting to leave hazelnuts and other dried fruits in his Swiss deposit boxes as decoys...
http://www.ft.com/cms/s/0/df3eeb9c-feb7-11dd-b19a-000077b07658.html
UBS has agreed to settle with the US government, in return for paying a USD870m fine and surrendering account details for 250 US citizens. The government wants the details of 52,000 US citizens. UBS says it will fight these ludicrous demands. However, UBS and the Swiss banking secrecy system that has made Switzerland what it is were effectively dead from the moment UBS agreed to surrender the details of the first client.
http://www.businessweek.com/ap/financialnews/D96FIN4O0.htm
The only thing that set Switzerland apart was their code of secrecy in banking. Without it, Switzerland relative advantages become chocolate-making and watch-making. A Swiss Account had become the byword for wealth and exclusivity. Now it will just mean that you are a tax dodger. Swiss chocolate still has a great cachet, and the Swiss would do well to start switching from being private bankers, to being private chocolatiers. You can have your own personal chocolate maker, confectioning the most delectable sweet mouthfuls of that brown paste for your private pleasure. I am not sure how that this will help the Swiss economy, though.
Without Swiss banking, the Swiss can go back to being successful mercenaries. They were the best in the world and that is why the Pope will only have Swiss Guards protecting him (unless they are all his private bankers). Switzerland will have to revoke its neutral status and get its hands dirty in all the world’s conflicts. They are already the most military-trained people in Europe, if not in the world, per capita. There’s always money in guns.
Realistically speaking, without secret private banking, Switzerland will have no reason to exist as an independent nation with national values worth preserving. Chocolate and cuckoo-clocks can no longer justify a serious European nation unless you’re Latvia, in which case you’d be lucky to have chocolate to stave off economic meltdown. So either Switzerland joins Africa, where it will become the most powerful nation there at a stroke with such amazing assets and where wars abound, or it can join the EU. When you’ve become an economic and political basket case, the EU means being in good company and also safety in numbers for the mediocre. Which brings me back to UBS. On my first day there, I was reminded that the acronym UBS stand for U’ve Been Screwed. How sadly true…
© Sameh El-Shahat 2009
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