Download - Switzerland and UBS Scandal
International financial marketsGroup Switzerland
Eric IriajenLeopold HenselShin Yuan HuangVanish PatelSana Usmani
University of Westminster, London, November 7, 2011
-
AgendaSwitzerland in the financial Crisis
November 7th, 20112 Global Financial Markets Presentation - Switzerland
1 Switzerland’s Economic Structure
2 Business Freedom
3 Financial Institutions
4 Government Intervention
5 The UBS Case
6 The Euro Crisis and the Speculation against the Swiss Franc
7 Economic Future of Switzerland
8 References
-
Switzerland’s Economic StructureKey Numbers
3
Gross Domestic Product (Real)
535.65 billion CHF (2009) 68’662 CHF GDP p.c. (2009) – CHF/Pound: 1,4/1
EmploymentStructure
Primary: 3.7% Secondary: 22.85% Tertiary: 73.5 %
Export
Most important: pharmaceuticals, food, watches, tourism, mechanical engineering and financial services
147.4 billion Euro in 2010 (52.5% of GDP)
Trade Surplus 14.6 billion EURO
Employment Average unemployment rate 2009: 2.8% 4.547 million people labour force
Global Financial Markets Presentation - Switzerland
Sources: www.bfs.admin.ch, epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
November 7th, 2011
-
GDP compositionSource: CIA World Bank
4 Alphas takeover of Baldor November 7th, 2011
-
Global financial impact on Switzerland Index of Economic Freedom
April 20115 Alphas takeover of Baldor
What is Economic Freedom?
Switzerland is 5th in the 2011 world ranking, 1st out of 43 countries in the European region
Comparison Switzerland, United Kingdom and United States.
General description
-
Economic Situation
Graph Compare
6 Global Financial Markets Presentation - Switzerland November 7th, 2011
-
The Financial Sector(1/2)Is important locally…
7
6% of the workforce is responsible for 12% of the Swiss GDP
Responsible for a net surplus of 12 billion CHF on the balance of payment
Swiss Banks have 11.5 trillion francs AuM
Swiss banks hold over 2,000% asset value of GDP
Some numbers Mainly insurances, banks and –
newly - hedge funds
Bank System: Universal banks (UBS and CS), cantonal banks, and foreign controlled banks 327 institutions
Customer confidentiality and political stability
…and the structure
Global Financial Markets Presentation - Switzerland November 7th, 2011
Source: http://www.swissworld.org/
-
The Financial Sector(2/2)…as well as globally
8
The BIS and the WEF are headquartered in Switzerland
Known as a global tax evasion hub serious conflicts with OECD countries
BCBS Basel III
General description
Shares of AuM in international private banking, 2009
Switzerland 27%
United Kingdom 25%
Luxemburg 11%
Caribbean 12%
Singapore and Hong Kong 10%
United States 8%
Other 7%
Global Financial Markets Presentation - Switzerland November 7th, 2011
-
Government Intervention (1/2)General description and Switzerland
9
Quantitative Easing is a form of government intervention
Method of monetary policy
Rarely occurs
Global financial crisis effect
General description
Secured savings up to 100’000 CHF pp
Saving of the UBS by the State and the national Bank
Barely deficit spending in opposite to other countries
Switzerland
Global Financial Markets Presentation - Switzerland November 7th, 2011
-
Government Intervention (2/2)Swiss stimulus compared to other countries
10
Sources: Non banking: Economic World (until Dec 2010) Banking: Bloomberg (until Sept 2011)
Global Financial Markets Presentation - Switzerland November 7th, 2011
-
The UBS case (1/3)UBS in 2007 and how the drama started
11 Global Financial Markets Presentation - Switzerland November 7th, 2011
Largest asset manager in the world 3.3 trillion AuM
Change from pure wealth management to investment banking
Biggest bank in Switzerland and significant impact on economy and culture
Situation 2007
High exposure in American junk bonds
Threatened by upcoming tax problems with USA and EU
Big share of swiss economy
Risk factors
Solution: Saved by external investors and the state of Switzerland
-
The UBS case (2/3)The Stock of UBS since 2007
12
Source: www.comdirect.de
Global Financial Markets Presentation - Switzerland November 7th, 2011
1. April UBS announce loss of 12 billion for first
quarter
10. Dec 2007 UBS announces
Capital raise
Kweku Adoboli looses 2,8 billion
frncs
4th quarter 08, UBS announces net loss of 8 billion and outflow of 80 billion in assets
16. Oct. the government
announces to save UBS
-
The UBS case (2/3)The Stock of UBS since 2007
13
Source: www.comdirect.de
Global Financial Markets Presentation - Switzerland November 7th, 2011
Credit suisse stock UBS stock
-
The UBS case (3/3)The Stock of UBS since 2007
14 Global Financial Markets Presentation - Switzerland November 7th, 2011
UBS Bad Bank
SNB
Government
Ownership bad bank -
1 CHFBuy back
option
Loan max. 54 billion
Mandatory convertible bonds
6 billion
Cash
Max 6 billion equity
Cash
Illiquid assets
-
The Swiss Franc Spekulation The Euro/CHF Excange Rate since 2007
15
Source: www.comdirect.de
Oct. 2007peak at 1,68
Sept. 2008Lehman Crash
Since 2010With the bad financial situation of Greece as the Euro debt crisis starts
Aug. 2011US loose AAA Rating
6. Sept 2011SNB sets a low boarder of 1,20
Global Financial Markets Presentation - Switzerland November 7th, 2011
-
Economic future of Switzerland
1616
Oijop
Still one of the wealthiest nations in the world, with a high chance of keeping that place
A risk factor although is, that its economy depends heavily on the world economy
Importance of offshore banking is unclear.
The exchange rate plays a big role, since over a half of its exports go into the EU. SNB Intervention bears risk of inflation.
Assumptions
November 7th, 2011 Global Financial Markets Presentation - Switzerland
-
References• CIA worldfact book, (2011). Switzerland. [Online] Available from
https://www.cia.gov/library/publications/the-world-factbook/geos/sz.html [Accessed 31/10/2011]
• BBC, (2011). Financial Glossary. [Online] BBC. Available from <http://www.bbc.co.uk/news/business-15060416> [Accessed 03/11/2011]
• Schweizer Bundesamt fuer Statistik . [Online] Available from http://www.bfs.ch
• Trading Economics, (2011). Switzerland Interest Rate. [Online] Trading Economics. Available from <http://www.tradingeconomics.com/switzerland/interest-rate> [Accessed 04/11/2011]
• Economic Watch, (2010). Spain Stimulus package. [online] Economic watch. Available from http://www.economywatch.com/economic-stimulus-package/spain.html [accessed 06/11/2011]
• Index of Economic Freedom, (2011). Switzerland. [Online] Available from http://www.heritage.org/Index/Country/Switzerland [Accessed 25/10/2011]
• Swiss World, (2011). Switzerland Economy. [Online] Available from http://www.swissworld.org/en/economy/?gclid=CNSa8rPKkawCFQ8ntAodbS4KnQ [accessed 28/10/2011
• Trading Economics, (2011). Switzerlnad GDP Growth chart. [Online] Available from http://www.tradingeconomics.com/switzerland/gdp-growth [Accessed 28/10/2011]
• Bank of International Settlements, (2011). Basel III. [Online] Available from http://www.bis.org/bcbs/basel3.htm [Accessed 01/11/2011]
1717 November 7th, 2011 Global Financial Markets Presentation - Switzerland
-
Thank you for your attention!
Time for discussion and questions
18 Global Financial Markets Presentation - Switzerland November 7th, 2011