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UBS boss says some banks may need state help: report

admin — Sat, 10 Sep 2011 22:33:22 +0000

ZURICH | Sun Sep 11, 2011 11:25am EDT

ZURICH (Reuters) – Some banks may have to get help from the state as plunging share prices could make it difficult to raise capital, UBS (UBSN.VX) chief executive Oswald Gruebel told Swiss newspaper Sonntag in an interview published on Sunday.

Gruebel said his comment did not apply to the top two Swiss banks as Credit Suisse (CSGN.VX) and UBS were now less likely, compared with 2008, to be affected by European banks that found themselves in difficulty given that interbank trading was no longer as important.

Gruebel said future returns from investment banking were unlikely to be 20 percent and above but around 10 percent, adding this also applied to the big players on Wall Street.

UBS itself had to be rescued by the state in 2008 after massive losses on toxic assets.

Gruebel criticized the Swiss National Bank’s recent move to set an exchange rate cap on the Swiss franc at 1.20 euros.

“We, as a small country with the franc, can’t dictate an exchange rate against the euro. That is impossible in the long term. Despite this, I hope the effect that has been reached is sustainable,” he said.

Separately, Credit Suisse chairman Urs Rohner, interviewed by NZZ am Sonntag, welcomed the SNB move to cap the franc.

“The franc was massively overvalued, as the actual purchasing power of the euro is estimated at about 1.35 francs to 1.40 francs,” Rohner was quoted as saying.

Credit Suisse analysts expect the euro to rise to 1.25 francs in the next three months and to 1.30 francs in the next 12 months, Rohner said.

(Reporting by Katie Reid; Editing by Dan Lalor)

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U.S. has tax statistics from 10 Swiss banks: report

admin — Sat, 10 Sep 2011 08:19:45 +0000

ZURICH | Sat Sep 10, 2011 9:39am EDT

ZURICH (Reuters) – U.S. authorities now have statistical data from the ten Swiss banks being investigated by the United States for helping U.S. clients to dodge taxes, Swiss newspaper Neue Zuercher Zeitung reported on Saturday.

TagesAnzeiger, another Swiss newspaper, reported that the Swiss banks now had until Sept 23 to hand over more specific client data.

Credit Suisse (CSGN.VX), which is one of the banks under investigation, had already handed over data earlier in the week, while the nine other banks had handed over the data through an intermediary on Friday, NZZ said without citing any sources.

The newspaper also said the Swiss government had given them “plenty of rope” to do this.

Mario Tuor, spokesman for the Swiss department for international financial affairs, declined to comment on the NZZ and TagesAnzeiger reports, but he said: “We are still going for a solution on the basis of existing legal rules in Switzerland.”

Late on Friday, Reuters reported that the United States was drafting legal documents, seeking to force nearly a dozen Swiss banks and international banks with Swiss branches to disclose the identities of American clients that evaded taxes.

Also on Friday, Swiss newspaper Blick said that Switzerland had given the United States an estimate of the number of its citizens who used secret accounts to avoid paying taxes between 2002 and 2010.

Swiss foreign minister Micheline Calmy Rey said on Wednesday that Switzerland had given the U.S. statistical data about the extent of U.S. taxpayers, but had not handed over any bank client data.

Handing over statistical data is possible within the current Swiss law that protects banking secrecy.

Switzerland, a noted tax haven that is the global capital of offshore private banking, has been under attack from U.S. Justice Department and Internal Revenue Service officials conducting a broad criminal investigation into private banking services that U.S. authorities say enabled wealthy Americans to evade billions of dollars in taxes.

The Justice Department served a target letter in July on Credit Suisse, Switzerland’s second-largest bank, notifying it that it was the focus of a criminal investigation. American authorities also are probing HSBC (HSBA.L) and smaller Swiss private banks and cantonal banks, including Basler Kantonalbank, Wegelin and Julius Baer (BAER.VX).

The Justice Department is trying to determine the total volume of unreported accounts held at Swiss banks. Officials suspect the accounts hold assets in the tens of billions of dollars and possibly more.

(Reporting by Katie Reid; Editing by Toby Chopra)

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Report: Germany has proposed a plan to protect banks in case Greece defaults.

admin — Sat, 10 Sep 2011 08:16:55 +0000

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U.S. readies papers v. Swiss banks on tax evasion

admin — Fri, 09 Sep 2011 00:23:57 +0000

By Lynnley Browning

Fri Sep 9, 2011 6:39pm EDT

(Reuters) – The United States is drafting legal documents that seek to force nearly a dozen Swiss banks and international banks with Swiss branches to disclose the identities of American clients evading billions of dollars in taxes, sources briefed on the matter said.

The drafting of the documents — grand jury subpoenas and broad requests known as John Doe summonses — is a fresh U.S. shot across the bow at Switzerland and its battered tradition of bank secrecy.

The Alpine country, a noted tax haven that is the global capital of offshore private banking, has been under attack from U.S. Justice Department and Internal Revenue Service officials conducting a broad criminal investigation into private banking services that U.S. authorities say enabled wealthy Americans to evade billions of dollars in taxes.

The documents could be served within a month or so on 10 banks, including some with headquarters outside Switzerland, these persons said.

Charles Miller, a Justice Department spokesman, declined to comment.

The legal pressure signals a new front in Washington’s fight against Swiss bank secrecy, a battle that in recent years has resulted in scores of Swiss bankers and advisers being charged, dozens of American clients indicted and several large banks investigated.

The Justice Department served a target letter in July on Credit Suisse AG (CSGN.VX), Switzerland’s second-largest bank, notifying it that it was the focus of a criminal investigation. American authorities also are probing HSBC (HSBA.L) and smaller Swiss private banks and cantonal banks, including Basler Kantonalbank, Wegelin and Julius Baer (BAER.VX).

Talks between the Swiss and U.S. governments to resolve the broad investigation broke down in June. Switzerland wants its banks to pay a multi-billion dollar fine, but the U.S. side wants client names as well.

James Cole, the deputy attorney general and the second-highest ranking law enforcement official in the United States, wrote to Switzerland’s top tax negotiator, Michael Ambuehl, in a three-page letter dated August 31 that federal authorities intended to serve the documents.

LAST CHANCE

But the Justice Department, in a move that gives Swiss banks another, last-minute chance to reach an agreement with U.S. authorities, also said it would hold off on enforcing them if the banks comply with the requests to turn over client data.

The existence of the confidential letter was first reported by two Swiss newspapers on September 4.

“It’s a fairly major event that the deputy attorney general would fire this off,” said Scott Michel, a tax lawyer at Caplin & Drysdale in Washington. U.S. officials, who have confirmed the existence of the letter, are angry that it became public.

The John Doe summonses will ask for names and account data on American clients with undeclared or unreported assets in accounts at Swiss banks. The summons is a civil, not criminal, procedure, and mirrors the one served on Swiss bank giant UBS AG (UBS.N) in 2008 by the IRS that sought to force the bank to turn over 52,000 American client names.

The UBS summons, later enforced by a federal court, was dropped only in 2010, more than one year after UBS averted indictment and reached a $780 million deferred-prosecution agreement with the Justice Department over charges it sold tax evasion services to rich Americans. UBS ultimately turned over 4,450 client names.

Like the UBS summons, the impending summonses are likely to fuel a diplomatic showdown between Washington and Bern. Switzerland, which unlike the United States does not consider tax evasion a crime, argues that Switzerland should not be subject to U.S. tax laws.

Ambuehl, who negotiated the deferred-prosecution deal for UBS, does not want a UBS-style model repeated for other banks — even though that deal included the possibility of future summonses against other banks, persons briefed on the matter said.

Robert Katzberg, a white-collar criminal defense attorney in New York who represents American clients of Swiss banks, called the combination of subpoenas — a criminal matter — and the summonses — a civil matter — “a smart tactic that will maximize leverage over other Swiss banks.”

“That U.S. taxpayer account records of 10 more banks are in imminent danger of being sent to the Justice Department is especially bad news for the thousands of U.S. taxpayers who decided not to come forward after UBS,” he added. “The consequences are likely to be really painful.”

(Reporting by Lynnley Browning in Hamden, Conn., editing by Howard Goller and Tim Dobbyn)

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Irish banks look beyond “bad bank,” recession

admin — Wed, 31 Mar 2010 09:47:49 +0000

DUBLIN (Reuters) – Bank of Ireland will raise from private sources much of the 2.7 billion euros ($3.6 billion) it needs, potentially becoming the only member of Ireland’s “bad bank” scheme to escape a fresh bailout.

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The bank’s statement on Wednesday that it was in fundraising talks with investment banks is a relief for the Irish government, which faces years of scrimping to plug a black hole created by the profligate financial sector.

The heaviest losses of all stem from now nationalized Anglo Irish Bank, which on Wednesday confirmed weeks of speculation by announcing a loss of 12.7 billion in the 15 months to December, the deepest shortfall in Irish corporate history.

The bank needs up to 18 billion euros of fresh state capital, almost as much as Dublin borrows in a year to fund its budget deficit.

Prospects for Bank of Ireland were relatively rosy and its shares jumped more than 24 percent after it said loan losses had peaked and it was in talks to raise capital to compensate for poor returns on property loan sales to the bad bank, the National Asset Management Agency (NAMA).

Ireland’s biggest bank by market value will privately raise about half of the capital it requires to provide a buffer against future losses. The state will convert some of its 3.5 billion euros of preference shares into ordinary equity but should not have to underwrite the rights issue.

“It’s not a proud boast to say you’re least worst… Relative to performance that kind of an issue is not something we take a lot of comfort out of,” Richie Boucher, CEO of Bank of Ireland, told a news conference.

Referring to the scale of property losses other banks were exposed to, he said: “I think the level of debt and exposures is pretty big, it’s pretty frightening.”

The problem all the Irish banks face will be competing for business in Ireland’s shrunken domestic banking sector.

In all, the three banks and two building societies involved in the bad bank scheme require at least 22 billion euros, with a possible further 10 billion for Anglo Irish at a future date.

The listed bank with the biggest capital problems, Allied Irish Banks (AIB) has been given time to try and sell assets before getting a fresh bailout, but some analysts still think it could end up 75 percent owned by the state.

AIB shares remained under pressure on Wednesday, falling 2.8 percent as it continued to digest Tuesday’s flood of announcements on the level of discounts NAMA will pay to take on property loans and the consequences for banks’ capitalization.

“They’re not in a good position, but at least people know. Investors are looking at the clarity of what they have to do,” one trader said of Allied Irish. “For Bank of Ireland, there’s a half decent underlying operating base.”

Bank of Ireland is selling the first tranche of its loans to NAMA at a discount of 35 percent and said the discount on the whole 12 billion euro portfolio will be in line with its previous guidance which pointed to a lower discount.

On Wednesday, it also reported an underlying loss of 1.47 billion euros for the nine months to the end of December, having shifted the end of its fiscal year to match the calendar year.

EFFORTS TO CUT

The injections into Anglo and two building societies take the form of promissory notes, in effect not paid for up to 15 years, which means it should not hold up Ireland’s efforts to cut what is one of Europe’s biggest deficits as a ratio of gross domestic product (GDP).

“But the cost of cleaning up Anglo may add 20 billion euros, about 12 percent of 2010 GDP, to government debt over 10 to 15 years,” Chief Economist Rossa White at brokerage Davy said.

The Irish government has insisted the cost is manageable, saying it has stabilized its economy with a series of public sector cuts announced in last December’s budget.

Ireland’s fiscal measures have done much to reassure international investors, who have compared the country favorably with Europe’s other struggling nations. The challenge is to maintain fiscal discipline.

“The magnitude of the financial problems is absolutely vast,” said Jim Power of financial services firm Friends First. “The budgetary medicine over the next few years is going to be extremely hard to swallow. Provided the government continues to address the problem, we should scrape through.”

The latest economic data on Wednesday added to the evidence Ireland’s economy is stabilizing at a low level. The number claiming unemployment increased by only 600 in March and the decline in private lending accelerated only marginally from 7.1 percent to 7.3 percent.

Finance Minister Brian Lenihan has said Ireland should begin emerging from recession late this year.

Bank of Ireland shares rose 24 percent to 1.60 euros by 1450 GMT, after rising as high as 1.7 euros. The stock has bounced from a low of 0.12 euros set a year ago but languishes well below a peak of 18.83 euros seen in early 2007.

(Additional reporting by Padraic Halpin and Barbara Lewis; Editing by David Holmes and Jon Loades-Carter)

($1=.7403 Euro)

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China banks absorbed $170 billion FX swaps in ‘09: report

admin — Wed, 03 Mar 2010 00:57:36 +0000

Chinese commercial banks absorbed about $170 billion in foreign exchange from the financial system last year, mainly through yuan-dollar swaps, state media on Wednesday cited a former official as saying.
The Shanghai Securities News cited Xu Shanda, former deputy head of the State Administration of Taxation, as saying that the State Administration of Foreign Exchange (SAFE), the foreign exchange regulator, absorbed about 1 trillion yuan through the swaps in 2009.
Xu estimated that such swaps could exceed $500 billion this year, thereby taking some 3 trillion yuan out of the financial system, but did not say how he had arrived at that estimate.
The central bank started conducting such yuan-dollar swaps in late 2005, but maintains tight secrecy over its activity in the market, partly because it does not want prices quoted for the swaps to lead to speculation over yuan appreciation.
SAFE is an arm of the central bank and is in charge of foreign exchange policy and managing the country’s $2.4 trillion in foreign reserves.
Authorities have been struggling to absorb a massive amount of yuan liquidity that has flowed into the interbank market as a result of inflows of foreign exchange from the trade surplus, foreign investment and speculative capital.
It has so far raised banks’ required reserves twice this year and has stepped up its sterilization of such inflows through its open market operations, draining a net total of about 193 billion yuan so far this year.
Xu said that stepping up forex swaps would be a better way of absorbing such liquidity than increases in banks’ required reserves, but did not specify why.

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Asia shares up, banks shrug off China policy move

admin — Tue, 16 Feb 2010 22:33:40 +0000

Asia shares up, banks shrug off China policy move
Asian shares leapt to a three-week high on Wednesday, powered by financial and resource shares after investors bought commodities on a weaker dollar, while Hong Kong shares shrugged off China’s latest move to temper robust lending.
The Hang Seng rose 1.8 percent after a long Lunar New Year holiday break, with Chinese bank stocks such as Bank of China surging in reaction to Friday’s surprise hike in bank reserve requirements by Beijing as it tries to moderate credit growth and inflationary pressures.
The announcement, which came on the heels of a similar move last month and was earlier than expected, had rattled markets on Friday by raising investors’ fears that tighter policies in the world’s third-largest economy would be more aggressive than thought and may damage global growth.
By the time Hong Kong stocks opened on Wednesday much of the initial excitement appeared to have dissipated.
“It seems that the market has already factored in the reserve ratio requirement increases,” said Castor Pang, research director at Cinda International. “The Hang Seng and the A share market have dropped too much recently.”
Shanghai markets remain shut this week.
Shares in Europe were set to extend gains, with Britain’s FTSE 100 to open up as much as 0.6 percent and France’s CAC to open up as much as 0.9 percent, financial bookmakers said.
Japan’s benchmark Nikkei average gained 2.7 percent for its biggest one-day percentage gain since December 3, but trading volume was one of the thinnest this year, with market players unsure how long the rebound will last.
The MSCI index of Asian shares outside Japan rose 1.8 percent, touching its highest level in three weeks.
Resource shares gained after copper led a rally across the broader base metals complex on Tuesday as the dollar stumbled and as equities markets recovered from a sell-off in recent weeks that was triggered by growing debt problems in Greece and fears that the global economic recovery was losing momentum.
U.S. stocks posted gains of as much as 1.8 percent overnight as traders returned from a three-day break, helped by strong New York State factory data and gains in Europe, where shares were buoyed by upbeat results from UK bank Barclays.
“There’s a bit more of a shift to riskier assets, especially those linked to commodities, and this may continue for a day or two,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management in Tokyo.
“There’s no question that the U.S. economy is improving, especially if you look at indicators, although this does raise the question of when we could expect an interest rate hike.”
Toyota Motor was flat after U.S. regulators opened an investigation into whether it had acted in a timely way to recall cars for acceleration problems. The automaker also moved to slow its U.S. production.
In Seoul, shares rose 1.7 percent as the U.S. data fueled foreign buying of financial and technology stocks, but a fall in the dollar and strengthening in the won limited gains in Hyundai Motor and other exporters.
In the afternoon, South Korea’s foreign exchange authorities were buying dollars to curb the won’s strength.
Australian stocks rallied 2.2 percent, the biggest one-day gain in two-and-a-half months.
Top miners BHP Billiton and Rio Tinto climbed 2.1 and 3.3 percent respectively as investors eyeing strong growth in Asia piled into industrial metals.
The dollar index, a gauge of its strength against six other major currencies, was unchanged from late U.S. levels after shedding 0.8 percent the previous session and hitting its lowest level in a week. It was the biggest one-day fall since November.
The euro held steady after surging 1.3 percent against the dollar on Tuesday. Investors were still cautious, however, wary that Greece’s debt problems have yet to be solved, and the euro remains highly sensitive to more negative fiscal news.
It was trading at $1.3769, steady on the day and well above last week’s nine-month low of $1.3532.
Gold prices steadied near two-week highs, with spot gold at $1,119 an ounce.
U.S. crude futures edged higher above $77 a barrel.
in TOKYO,

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G7 agrees banks must help pay crisis costs

admin — Sat, 06 Feb 2010 13:56:03 +0000

IQALUIT, Canada (Reuters) -
Group of Seven officials agree banks must contribute toward the cost of dealing with the financial crisis but have not agreed on how they should pay, a German official said on Saturday.
“There is a consensus that banks themselves have to contribute to pay for the financial burden of the crisis,” the official said, speaking on condition of anonymity.
But he said there was no agreement on exactly what form payments should take.
The British government has announced a 50 percent levy on large bonuses at banks to help cover the cost of the crisis.
U.S. lawmakers have been slower to move on taxing bonuses. President Barack Obama in January proposed a fee on the largest financial companies to recoup expected taxpayer losses associated with the bailouts.
The German official said Canada, which did not have to bail out its banks during the crisis, had put forward ideas on strengthening lenders and broader financial market reform.
“Canada has made a proposal, in which three points have been lined out, and which were supported. The first issue is that of capital rules,” the official said.
“The second is to recreate a transparent securitization market. And the third is the sector of market infrastructure especially for derivatives.”
A revival of the securitization market could play a key role in supporting the global economic recovery.
Securitization of subprime mortgages, in which home loans are bundled and sold onto the secondary debt market as securities, helped inflate the U.S. real estate bubble that burst in 2007-2008, triggering the financial crisis.
Since then, the securitized mortgage debt market has been flat on its back, kept alive largely by government support, with bankers and regulators searching for ways to revive it.
President Obama, seeking to make lenders more concerned about the repayment potential of loans they make, wants to require that they keep on their books a minimum percentage of the loans that they securitize.
The U.S. Congress so far has backed Obama’s so-called “skin in the game” rule, and is debating other measures that would require clearer disclosure of the risks inherent in often complex securitized debt instruments traded on the markets.
The German official also said Finance Minister Wolfgang Schaeuble has invited his G7 counterparts to a May 20 meeting in Berlin on financial system regulation.
The conference, hosted by Schaeuble and attended by Chancellor Angela Merkel, is being attended by central bankers, regulatory authorities and academics.
The gathering will “work toward an integrated global framework in order to provide a level playing field,” according to the invitation letter Schaeuble sent to his G7 colleagues.
It will also aim to “review achievements made so far, and to gather a new political momentum to address the remaining challenges ahead.”

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Currencies ahead of central banks rate decisions

admin — Sat, 06 Feb 2010 09:21:59 +0000

Thu, Feb 4 2010, 11:59 GMT
by ecPulse.com analysis team
The dollar is gaining massive grounds in markets, as investors are avoiding higher yielding assets, which once again supports the dollar to rise versus majors since once again there are worries in marketsregarding the global recovery taking longer than presumed to occur, especially since European economies are having a hard time to try and lower their deficits. The Dollar Index, which usually measures strength of the dollar versus six major currencies, is currently traded at 79.59 while recording a high of 79.70 and a low of 79.34.
Today is a big day in the euro zone,where the ECB will announce interest rates, whereexpectations show that they will remain steady at 1.00%; while later on in the day, President Jean-Claude Trichet will give speak at press conference stating the latest economic progress. Currently, we see that the EUR/USD is being traded at 1.3845 between the support of 1.3800 and the resistance of 1.3925, while so far recording a low of 1.3825 and a high of 1.3902. The momentum indicators on the one-hour charts are showing us a downwards trend, while the pair trades close to an oversold area.
The Bank of England today is scheduled to announce their rate decision, in which expectations show will leave them steady at 0.50 percent, the lowest since the bank’s foundation in 1694. Also, the pound like the euro is plummeting versus the federal currency based on the fears in markets; the pair is currently traded at 1.5847, while recording a high of 1.5917 and a low of 1.5822. For the GBP/USD we see that there is a support at 1.5800 and a resistance at 1.5910, while here also we see that the pair is being traded in an oversold area.
Turning to the yen, we see that it is a different story as it rises past the dollar especially after retail sales in Australia unexpectedly fell, while unemployment rates in New Zealand soared to the highest level since 1999; therefore increasing the appeal of the yen as a refuge. The USD/JPY is being traded at 90.59 between the support of 90.20 and the resistance of 91.30, while recording a high of 91.07 and a low of 90.58.

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World stocks tumble as Obama targets banks (AP)

admin — Fri, 22 Jan 2010 19:11:55 +0000

LONDON – World markets fell Friday, led by bank stocks after
to avert future financial crises.
or cost taxpayer money in bailouts.
The announcement spooked investors, causing a sell-off in Europe after sharper falls in the U.S. and Asia.
Britain’s FTSE 100 stock index was down 1.0 percent at 5,280.82 and
shed 1.0 percent to 5,691.31.
’s CAC-40 lost 1.0 percent to 3,823.01.
Wall Street fell for a third day on the open, with the
down 0.6 percent at 10,330.18 and the Standard & Poor’s 500 index down 0.5 percent at 1,110.87.
’s recent moves to prevent its economy from overheating amid worries of inflation and asset bubbles.
Bank stocks were hit hardest, with Barclays Plc down 5.8 percent,
3.8 percent and
4.2 percent lower.
Adding to the uncertainty are questions about whether this year’s economic prospects justify more gains after the run-up in stock prices that began in early 2009, said Mark Matthews, strategist at Macquarie Capital Securities in
.
Last year “was such an amazing ride and people are starting to wonder if the recovery that we’re seeing in 2010 was already priced in,” Matthews said.
Upbeat earnings from McDonald’s,
and Kimberly-Clark failed to reassure investors, who moved to cash in on their gains on a 10-month rally in equities.
In Europe, attention remained focused on the debt problems of Greece, with officials stressing the country will not need a bailout but will manage its funding on the market. The possibility that other countries, such as Portugal or
, could also have trouble handling their debt has kept markets on edge, pushing the euro to 5-month lows against the dollar.
The euro recovered somewhat on Friday, to $1.4118 from $1.4082 late Thursday. The dollar weakened to 90.25 yen from 90.49 yen.
In the U.K., officials statistics confirmed that British consumers splurged on food and drink during the holidays, with retail sales rising 3.6 percent in December. The rise, however, was not a strong as some analysts expected, suggesting recovery from recession will be gradual.
In Asia earlier,
led the drop, with the
stock average diving 2.6 percent to 10,590.55.
dropped 0.7 percent to 20,726.18 and Korea’s main market index lost 2.2 percent to 1,684.35.
Elsewhere, China’s Shanghai benchmark fell 1 percent, India’s Sensex shed 1 percent and Australian stocks retreated 1.6 percent.
While banks in the U.S. fell steeply, shares in
performed better, with many closing the session higher. Japanese lender
edged up 0.2 percent and China’s ICBC gained 2.3 percent in
. Other industries like commodities suffered big drops as concerns about future global demand prompted investors to scale back their riskier bets.
edged lower, with benchmark crude for March delivery down 40 cents at $75.68 a barrel. The contract dropped $1.66 to settle at $76.08 overnight.
AP Business Writer Jeremiah Marquez contributed to this report from Hong Kong.

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