Spin, Swiss Style
November 4th, 2009
November 4th, 2009
A smiling Urs Roth appeared on Bloomberg TV last week in a video version of whistling through the graveyard. Roth, who is CEO of the Swiss Banking Association, was in Washington to meet with the key people who will shepherd the country through the next iteration of banking regulation. With Swiss bank giant UBS recently coming out on the wrong end of a heavy weight bout with the Justice Department, Roth was no doubt trying to make nice with the people who could make his job a whole lot more difficult in the future.
Part of Roth’s p.r. campaign was to appear on Bloomberg television. He looked and sounded confident but what came out of his mouth was complete spin that belied the severe blow Swiss banking is taking after the recent tax evasion scandal. The essence of the interview can be distilled down to the following exchange:
“JON ERLICHMAN, BLOOMBERG NEWS: Urs, obviously one of the biggest questions is wealthy clients, will they turn their back on Swiss banks? What evidence have you seen for or against that?
ROTH: Fortunately, none at all. What we have been very satisfied of was that all of the financial centers which concentrate on wealth management have at the – basically at the same time accepted the OECD-26 standards. So that was good for Switzerland. And Switzerland has many other advantages for wealthy clients to be there and to continue business in Switzerland.”
None at all? Really?!
On Tuesday the Wall St. Journal jammed a wrench into Roth’s spin cycle with the following story:
“Swiss bank UBS AG (UBS) is facing big challenges at its wealth management business, which is suffering from both homemade problems and structural changes in the business of managing assets for the rich, and may see more clients taking their wealth elsewhere in coming quarters.
The Zurich-based bank said clients continued to pull out funds in the third quarter, resulting in net new money outflows of 16.7 billion Swiss francs ($16.2 billion) at its wealth management business, which includes private banking, or managing funds for very rich clients.”
The real story is that people are voting with their wallets and are exiting Swiss banking. It’s no longer deemed safe (i.e secret) enough to do business there. True, many of those people may be putting their money into other secrecy jurisdictions. But the ultimate message is that vigilance works. The dogged pursuit of the UBS case by the Justice Department did a world of good as far as pulling back the veil of secrecy that hides so much corrupt, tax evading, criminal and terrorist money. Hopefully, the Obama administration has only just begun.
🚨@FinTrCo & 36 global civil society orgs call for US to tackle its black hole of financial secrecy undermining demo… https://t.co/c9YXSj1fUm
- Wednesday Mar 29 - 2:32pm