Watched by the world
Peace conference plans, messy finances at Leonteq and solar power problems
Dear Insider,
No one can blame the Swiss for trying.
For sure, Switzerland is not known as a country of “super-strivers” in the same way that workaholic Americans or Japanese are.
But efforts are made and results are seen.
Now the world will be interested to see what results come out of a planned peace conference announced by Swiss president Viola Amherd and Foreign Minister Ignazio Cassis.
Domestic commentators on the whole are not optimistic. In typical Swiss fashion, they deride the plan as “showboating.” They may have a point…
But then again - you have to wind the watch to make it run - and getting to peace requires more than guns and bombs.
As this edition of The Swiss Insider highlights, however, fixing the “watchworks” of the world and your own are two different things.
Side note: Follow me on LinkedIn and on X for spontaneous updates and tidbits during the week!
People in the news
Patrick Frost (Swiss Life) - Patrick Frost, the outgoing CEO of one of Switzerland’s largest insurers, saw a slight decrease in his total compensation in 2023, receiving 4.04 million Swiss francs, down from 4.28 million Swiss francs the previous year.
Verena Gross (Pictet) - The head of Wealth Management for German-speaking Switzerland moved to the venerable Geneva bank from Goldman Sachs. She is part of Marc Pictet’s plan for further Swiss expansion.
Christof Schenk (Holderhof) - Known as the “king of Swiss drinks”, Christoph Schenk’s and his company Holderholf produce 70 million bottles annually with 100 employees. Holderhof's revenue has tripled over five years, reaching 90 million Swiss francs.
🫱🏻🫲🏻 Come together
President Amherd and Foreign Minister Cassis plan a Ukraine peace conference
The details:
Switzerland is planning to host a high-level peace conference on the topic of the Ukraine-Russia war at the Bürgenstock Resort near Lucerne in mid-June, aiming to include 80 to 100 countries, many from the “global south,” - such as India, Brazil, South Africa and Saudi Arabia.
The participation of China is seen as a critical factor for the credibility of the Swiss initiative, as Ukraine's allies recognize China's influence on Russia.
The big picture:
There is a push for Russia's attendance at the conference, but Ukraine seeks an agreement on key principles for any future settlement before engaging with Moscow. Many fear that a conference which only “talks around the topic” - without hands-on negotiations, will be fruitless.
The lesson:
Foreign Minister Cassis is anxious to burnish his reputation - and that of Switzerland - as a global peacemaker. His FDP party is decidedly pro-business and peace, together with strong international relations during a peace conference, may support more deal-making for Swiss business. An “active neutrality” as foreign policy is also seen as a good counterweight to the more narrow-minded neutrality of the far right SVP party in Switzerland.
❗️❗ Be sure to follow The Swiss Insider on LinkedIn - right here.
🚪Revolving door
Structured product specialist Leonteq loses its CFO - again
The details:
Antoine Boublil, the CFO of Leonteq, has left the company after less than four months, having joined at the beginning of the year from his previous position as CFO of Credit Suisse Switzerland, to "pursue other opportunities".
Hans Widler has been announced as the new CFO and a member of the executive committee, a role he temporarily filled during a four-month vacancy last year. He brings over a decade of experience at Leonteq and prior roles in financial management and consulting in Switzerland and Singapore.
The big picture:
Leonteq has been a pioneer in the structured product business - a highly lucrative segment for Swiss financiers.
But recently the firm has run into troubles. Its AML practices faced scrutiny from German regulator BaFin. Questions in France are also causing concerns.
It would seem that the finances under the hood were not as in order as they should have been.
The lesson:
While Swiss banks have plenty of wealthy clients with seemingly endless appetite for cool financial products, shady practices has started to catch up with the ones who used to be the toast of the town.
📈 A chart is worth…
As inflation in Switzerland has continued to fall, the Swiss National Bank became the first major central bank to cut interest rates. The Swiss franc reacted quickly to the downside - which will keep exporters happy.
☀️ Stuck with the sun
Switzerland’s efficiency in producing solar energy brings issues
The details:
Switzerland has witnessed a solar energy boom, with a significant increase in the installation of solar power systems. Almost every month brings a new record high in production.
Over the past year, new photovoltaic systems with a capacity of around 1500 megawatts have been installed (which is one and a half times the power output of the Gösgen nuclear power plant.) In the first three months of this year, the momentum has grown even stronger, with plans for additional solar installations with a capacity of over 450 megawatts.
The big picture:
The known challenge of solar power - unpredictable production - is now catching up Swissgrid - the country’s power grid operator. Its CEO Yves Zumwald has called for better forecasting - but expertise in the area is just being refined.
The increase in solar-generated electricity impacts Swissgrid in more ways, as it implies a need to optimize the amount of control energy kept in reserve — which isn't free, adding extra cost. Plus, to support the growing solar infrastructure, power lines need to be upgraded and monitored.
The lesson:
Swiss efficiency is now facing new challenges in new areas. The unpredictability of solar energy production makes life difficult not just for Swissgrid and its partners - it also add uncertainty to the public debate about energy policy. (See The Swiss Insider edition “(Not so) fast forward”)
If only the sun was more “automatic”…
The Insider Advantage
Switzerland’s role in the world has long been that of a “quiet cousin.”
Not directly related to any particular camp and uninvolved (directly) in any particular conflict, the country may facilitate - and profit - while storms rage all around.
Meanwhile, the internal machinery keeps on ticking. Quite nicely as a matter of fact.
But that may no longer suffice.
No one can argue that the “watchworks” of the world aren’t ticking so well these days. The war in Ukraine threatens everyone - directly or indirectly.
Switzerland is stepping up to the plate to make an effort to fix things. It will be successful only in the measure of how pragmatic the Swiss - and other guests - will be.
At the same time, domestic cogs in the wheel of Switzerland’s success machine need fixing too. Leonteq’s revolving CFO door points to the challenge that Swiss financial companies have with their people: the successful ones aren’t always good. And good ones don’t always make companies successful.
The Bonus
👆🏻 The northmen are coming - Norwegian billionaires fleeing rising tax rates at home are relocating to Switzerland. Big Norwegian banks - including DNB Bank ASA and others are also heading south to Zurich and Lucerne - to keep their business. (Link)
📈 On the rise- The Swiss franc strengthened against the dollar and euro amid escalating Middle East tensions, notably due to Israel's suspected retaliatory actions against Iran, despite some gains being erased as market conditions stabilized. (Link)
🎷Jazz it up - The Montreux Jazz Festival 2024 is set to feature 64 concerts including performances by Alice Cooper, Lenny Kravitz, Sting, and emerging artists for its 58th edition running from July 5-20. (Link)
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