Sitting Pretty - Sitting Swiss
The Swiss Insider 31.05.2020 #insidersdoitsmarter
Dear Insider,
Have you heard the bells? The horns in the streets? The alpenhorn high in the hills?
That’s the sound of a country celebrating its defeat of corona. A happy, joyful…somewhat uncertain sound.
Swiss business monthly Bilanz this week issued its June edition with the bold cover title “Swiss Power” - and one might tend to be taken in by the not-so-subtle triumphant tone. After all, the worst seems to be past and now, after many billions of Swiss francs spent in propping up the economy, the time has come to start actually doing business again.
The truth remains a bit more complicated…
Yes - there are positive signs. Full stores and Swiss students anxious to avail themselves of the beautiful spring weather can be seen as strong indicators of domestic demand. Meanwhile, the government stands ready to intervene again if need be. (And on the currency front, the Swiss National Bank seems to be doing exactly that…)
But the question remains - are the Swiss sitting pretty, especially compared to their Italian neighbors and their Chinese trading counterparts, or just merely sitting…on a time bomb?
Time will tell…
🔍 The Scoop
Inside takes that don’t necessarily make the front pages of daily news…
(Photo courtesy of Financial Times)
👨⚖️ The gathering
UBS’s newly minted co-head of wealth management is wasting no time bringing together his old pals - this time the name on the list is Rémi Mennesson. Of course, this is the very situation that Credit Suisse sought to hinder with its discreet (or not so discreet) spying operation.
📲 Twint’s time of tribulation
Its CEO regularly proclaims great success in its growth, but TWINT, the Swiss homegrown payment system, isn’t all red and rosy. A majority of its 45 000 new clients per month end up using the service mainly for peer-to-peer transfers of 10 CHF or less, which doesn’t exactly bring home the big bucks. Now the firm is rumored to have employed Accenture consultants at 200+ CHF an hour in order to bring order to the company’s future path.
The Numbers Game
All the numbers that matter in Swiss business…
🍫 27
Läderach, the venerable Swiss chocolate house, is rumored to be letting more than 25 of its employees go, many of them over 60 years old without any extra help or social security support. The new is representative of many firms in the ‘real economy’ which face hard dilemmas in the days ahead…
🏭 72%
The month of April was brutal for Swiss exports. Compared to the same period the year before, the country’s combined industrial output sent overseas (over border) fell by a full 72%. The drop came despite the best efforts of the SNB to support a weaker Swiss franc - one of the tenants of the central bank’s main raison d’etre over the past decade.
🤧 13 000
With a full 13 00 full-time employees in Switzerland, Credit Suisse has more than a handful of residents on its payroll. Now it is attempting to offset some of the coronavirus hurt by asking its top managers to take up to 2 extra weeks of unpaid leave over the next few months.
💰 14%
More known for its banks than its bunkers, Switzerland remains a major center for gold refinement and dealing. Now that financial uncertainty has set in for the long haul, it is no surprise that the price of gold has jumped by almost 14% since the beginning of the year.
The Briefing
In which we digest business news from around Switzerland - bit by bit…
📉 The final price
The sale of Globus by its parent company carried a pretty price tag - roughly 1 billion CHF. But thanks to the coronavirus crisis, that final ticket price will be approximately 15 million CHF cheaper. Who would have guesssed…?
⚖️ Appealing higher
Pride - prejudice. Both are in play as Credit Suisse continues to deal with fallout from its ‘spying scandal’ involving former wealth management executive Iqbal Khan. Now the Swiss bank will take its case against the law firm designated to investigate it to Switzerland’s highest court in an effort to throw a wrench in the proceedings…and slow down the process.
💥 Reducing the risk
Swiss financial regulator FINMA has lent UBS and Credit Suisse another helping hand, making permanent the general policy which lets the two Swiss banking giants exceed their capital risk limits. The regulator has already turned a blind eye multiple times over the first quarter of 2020, now it won’t have to worry about revising again.
🚙 Cutting down on cars
While Switzerland is known for its public transport system (and its punctuality…) there are a fair number of personal vehicles as well. But the public health crisis and the associated financial spiral has cost the automobile industry as well - with car sales down 52% year-to-year.
💸 Maerki Baumann goes crypto - again
Swiss private bank Maerki Baumann has touted its crypto asset credentials on multiple occasions - now it is doing so again, with the announcement that it is now able to offically (per FINMA approval) handle the crypto asset class. Its clients will be pleased…maybe.