Corona on My Mind
The Swiss Insider 01.03.2020 #insidersdoitsmarter
Dear Insider,
Let’s be honest.
The only topic anyone cares about these days is the ongoing coronavirus outbreak, which (unfortunately) has snuck across the Swiss-Italian border and begun to wreck havoc in Switzerland.
No - people are not dropping like flies on the streets of Zurich and Bern. Nor are they anywhere. But the effect of the virus on global supply chains is being felt. The SMI (like most other markets) took a hit, dropping down to the 10k mark. The outlook for the country’s economy has been revised (see below).
For a nation that likes to measure its attractiveness in the number of Asian tourists that crowd the streets of Luzern and Interlaken, the virus has brought a hit to top attractions as well as to the Swiss watch industry. Chinese tourists are the 4th largest group to visit the country.
Add to that the fact that the Swiss franc is generally viewed as a safe haven currency - to which investors resort in times of trouble. So good for investors, but not so good for the Swiss economy as exporters will tell you. Speaking of exporters, China and Hong Kong are the 4th largest export destination for Swiss goods. Not a good combination.
Meanwhile, the usually reticent Federal Council has taken the unprecedented step of banning all gatherings of over 1 000 persons for the next two weeks. That’s the first time ever on the federal level.
Will it bring the country to a halt? Likely not. The Swiss are too practical, too well-organized and too resourceful to knuckle under.
But it will cause serious questions to be asked about trade links to Asia and especially when it comes to dependence on Chinese suppliers (and buyers).
In the meantime, some people - like hand sanitizer manufacturers and drug stores - are making a killing…
That’s the way business works.
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What to Expect
A brief run-down of what to look for in this week’s edition of The Swiss Insider:
The Enablers - a closer look at the background figures who helped Axel Weber make the suprise decision to bring in Ralph Hamers as UBS’s newest CEO.
The Numbers Game - the most important (and at times audacious) numbers to be had in Swiss business over the last week. (Look for largeness…because size matters.)
The Briefing - snippets of news designed to make you smarter and keep you abreast of the latest developments across the wide Swiss business landscape.
The Events - a quick rundown of some of the most interesting business events in Switzerland in the next few months (which haven’t been cancelled due to coronavirus…so far.)
The Enablers
When Axel Weber and UBS sent the Swiss banking world into fits of consternation with their choice of Ralph Hamers (formerly of ING in Holland) as Sergio Ermotti’s replacement, it became clear that a game had been played - and very well at that. The announcement of Hamers as chief executive was hastened by reporting by the Financial Times; otherwise, the charade of searching for a new CEO might have gone on for some time.
How did it all go down? As usual, Bilanz Magazine has most (if not all) the gory details. What is clear is that several people played a key role - both supporting or otherwise - in bringing about the change at the top of UBS.
Let’s call them The Enablers…
Iqbal Khan - the talented ex-Credit Suisse Wealth Management chef was supposed to be a top candidate to replace Ermotti. But his relationship with CS-CEO Thidjane Thiam gave Weber and the UBS Board pause when thinking of how he might handle being CEO with Ermotti as Weber’s replacement as Chairman of the Board.
David Sidwell - the Senior Independent Director on the UBS Board and former CFO of Morgan Stanley, Sidwell has been on the UBS ship since 2008. He apparently fiercely opposed replacing Ermotti with internal candidate, Sabine Keller-Busse (COO).
Andrea Orcel - yes, the flamboyant former head of UBS’s investment bank was once also a favorite to replace Ermotti. But when he sent his career up in flames by insisting on heading to Santander (where money got in the way) he inadvertantly opened the way for Hamers as a UBS outsider.
Mark Schneider - no, the Nestle CEO had nothing directly to do with the UBS job hunt. But the fact that he took the top job at one of Switzerland’s flagship companies without having had any direct experience in running a similar business was surely a factor in making Weber & co. comfortable handing Hamers the keys to the kingdom without knowing much about wealth management.
The Numbers Game
In which we serve up some of the more interesting numbers in Swiss business…
0,2%
The word on everyone’s lips is coronavirus… How could you blame them? It is also on the lips of economic forecasters from Economiesuisse who see growth slowing by at least 0,2%.
3rd
World rankings can be nice - especially if you, your team (or your country) are at the top. Switzerland figures prominently in many “Best-of…” lists, but one is with dubious honor: being ranked 3rd among a list of most popular tax havens around the world.
12,5 million CHF
It pays to be CEO. Just ask Sergio Ermotti. The (now lame duck) CEO of UBS garnered a European-high 12,5 million CHF in 2019 as top dog at Switzerland’s largest bank. That was actually a drop from 2018 when he raked in 14,1 million CHF. After 1 November he will have to find a new way to keep the credit card loaded…
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The Briefing
Swiss salary survey
If Sergio Ermotti is taking home (sooner or later) over 12 million CHF for his work last year - what is everyone else getting? To answer that question, Robert Walters conducted a survey of employees in a variety of areas. The bottom line? Bankers still bring home the big bucks… And 2019 and 2020 will probably not see a dramatic increase in salaries. With high employment costs and an uncertain economic outlook, there are no big bonuses in sight. (Dive into the survey here.)
From trash to treasure
With 31 million customers, online clothing giant Zalando needs no introduction. Nor does Bucherer - the cult luxury watch company. What do they have in common? Both will now offer second-hand items for sale. Certified Pre-Owned watches have been on offer at Bucherer for slightly over a year. Now Zalando is getting into the game as well…apparently by popular demand. (Learn more here.)
Trucking together
Transport is a big deal, especially in the day and age of global warming and CO2 awareness. Two Swiss trucking companies - Ruckstuhl Transport und Emil Egger - have come together to offer a pilot program “City-Logistik” which will make sure that trucks do not run empty - or nearly empty into the center of St Gallen. And all without any monetary support from local authorities. (Read all about it here.)
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The Events
The Fourth Annual Private Wealth Switzerland Forum (12 March - Geneva):
The Who’s Who of Swiss wealth management service providers (and there are plenty to go around) will come together at the Beau-Rivage Hotel in Geneva. Headline names on the agenda include: Jean-Damien Marie (Managing Director & Head of Investments EMEA at Barclays Private Bank), Manuel Streiff (Head of Fixed Income at Private Bank, Lombard Odier), Eric Syz (Founder & Group CEO at Syz Group).
Swiss FinTech Awards - by Finanz und Wirtschaft (12 March - Zurich):
The annual gathering of fintech faces in Zurich may come across as a “forced innovation lovefest,” but it still manages to put a spotlight on some of the top finance startups from around the country. This year’s ceremony is hosted at the Gottlieb Duttweiler Institute (instead of the Dolder Grand Hotel).
Swiss Economic Forum (28-29 May - Interlaken)
Switzerland is more well-known of course for the the World Economic Forum, but the national version (though not affiliated with the WEF at all) is a strong affair in its own right, though decidedly less posh. Still - Interlaken is not a bad place to discuss the future of Swiss business…