Funds Hub

Money managers under the microscope

from Summit Notebook:

Private Bank finds synergy in public bar

It is a little known fact that private bank Wegelin, Switzerland’s oldest bank is also active in the bars and restaurants business.

In its ‘Nonolet’ bars – a play on the Latin saying pecunia non olet (money doesn’t stink) - in St. Gallen and in Geneva, hedge fund managers and other financial professionals rub shoulders with other locals in the early evening over sparkling wine or champagne and snacks.

from Summit Notebook:

Swiss brand key to banks’ cache

One question kept coming up when I announced four years ago that I was moving from Washington to Geneva: "Will you get a Swiss bank account?" There is an unmistakeable international cache surrounding Switzerland's financial sector, whose infamy as a hiding place for Nazi gold has given way to Hollywood mystique about secretive numeric codes cracked by Da Vinci Code protagonists and James Bond.  But within the small Alpine country, which remains stubbornly outside the European Union despite sharing borders with France, Germany, Austria and Italy, bankers are in fact celebrated for being as dull as they are discrete.  Christian Raubach, managing partner of Switzerland's oldest bank, Wegelin & Co, told the Reuters Wealth Management Summit that the biggest Swiss banks rely on their "Swissness and security and boringness" to attract clients from abroad. Guillaume Lejoindre, managing director at the Swiss private banking arm of France's Societe Generale, said it was precisely this reputation that made Switzerland such a powerful financial power, even in an age when total secrecy has been abolished and big institutions like UBS admit to taking big risks akin to those that took down Lehman Brothers.  Droves of Saudi and Gulf banking clients file into Geneva to spend the summer with their families every year and wealthy Latin Americans are also clearly inclined to store their funds in Switzerland to try to make them less likely kidnapping and extortion targets. The strong overall brand means that the banks can charge a premium over other centres and also continue to draw in new funds even in dark economic times.  "What is the price of trust and confidence? What is the price of expertise? We all know that a Hermes bag is more expensive. Is it a problem? I don't think so," the Societe Generale executive said.  In this way, much like Swiss watches, Swiss hotels, Swiss chocolate and Swiss beauty creams, the biggest asset even the most endowed Swiss bank has is clearly its brand -- which may actually hold more value internationally than at home.

Hedgies sit on the fence

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There has been much debate about whether London’s hedge fund community, angry at plans for a 50 percent tax rate on top earners and the EU’s draft directive proposing tough controls on the sector (not to mention the usual problems of traffic, high property prices and quality in life in London that usually get raised), will head to low-tax Switzerland.

rtr273vjOur analysis today argues that, while a trickle have already left, there are far more who have upped the rhetoric but are simply waiting to see who wins the next election.

Morning line-up

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Hedge fund stories from the past 24 hours from Reuters and elsewhere:

rtxcg5s2Hedge funds flee to Switzerland – Guardian

Bullish times return – Forbes

Investors do greater due diligence - Dow Jones

Harbinger sells more Calpine stock – Reuters

Morning line-up

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Hedge fund stories from the past 24 hours from Reuters and elsewhere:

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Fuld says being “dumped on” for Lehman failure – Reuters

MF Global starts Japan brokerage – Bloomberg

Despite UK taxes, funds stay in London – WSJ

US hedge fund locks horns with Chinese tycoons – South China Morning Post

Pushing back against energy speculation limits – Institutional Investor

Lugano: Billions in Madoff losses

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Lugano: Madoff hotspotThe sleepy town of Lugano, in the Italian-speaking Ticino region of Switzerland, has emerged as a key collection centre for Madoff-related funds.

Between $2 billion and $5billion lost in the Madoff fraud was gathered in the town–population 52,000–much of the money coming through the Italian cities of Milan, Turin and Rome, according to private banking and investment management sources who requested anonymity.

Don’t head for the slopes just yet

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Disgruntled London-based hedge fund managers annoyed by the prospect of tougher EU rules and higher income tax shouldn’t pack their bags and fly to Geneva just yet, according to law firm Katten Muchin Rosenman Cornish.

rtxd323At a breakfast briefing at London’s plush Capital Club this morning, legal experts said further details and amendments to the European Commission’s draft directive last month were likely, but said it was too early to decide to relocate.

from DealZone:

UBS dodges bigger bullet in tax pact

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SWITZERLANDEmbattled Swiss bank UBS struck a deferred prosecution agreement with the U.S. Justice Department that will cost them $780 million. It could have been worse.

Though paying a hefty fine, the Swiss bank is paying ZERO punitive fines, despite conceding that they helped U.S. residents -- estimated to number 250 -- avoid paying income taxes over an eight year period.

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