Banking on Politics
They say that if you want to find an outlaw, you hire an outlaw. This may be the thinking behind UBS’s move to put some political muscle into the chairman’s office. The bank, facing a U.S. inquisition over providing sanctuary for wealthy U.S. tax dodgers, says former Swiss Finance Minister Kaspar Villiger will succeed Peter Kurer as chairman. Later this morning, a U.S. Senate panel holds a hearing on offshore tax havens and IRS attempts to get names of U.S. clients from UBS. Mark Branson, chief financial officer of UBS Global Wealth Management, is scheduled to testify.
On Monday, legislators took aim at offshore tax havens in Switzerland, the Cayman Islands and other nations, targeting them for shutdown with bills introduced by Democrats in both chambers of Congress. The whole sordid business has become very public, and very un-Swiss-bankish.
Villiger will have to deal with the scandalous allegation that USB kept its clients’ financial information secret. Given that secrecy is perhaps the biggest marketing plank of Swiss banking, he may find it hard to distance UBS from the political fallout. Perhaps the best he can do is keep secret the details of any deal the bank makes with U.S. authorities.
On Monday, Switzerland’s top justice official met with her U.S. counterparts and said the Obama administration is not interested in escalating a dispute with Switzerland over bank secrecy laws. So a more private sort of arrangement may yet be agreed over coffee and chocolate. But the bill may be steep for UBS, as there appears to be little incentive for Washington to play ball.
Deals of the Day:
* General Motors’ Saab brand has received interest from several potential bidders including China’s Geely Automobile and Dongfeng Motor Group, sources with direct knowledge of the sales process said. But a senior Geely executive said the company is not interested in foreign brands.
* Rio Tinto shareholders are warming to the miner’s proposed $19.5 billion tie up with China’s top aluminium maker Chinalco, Chief Executive Tom Albanese said.
* Royal Bank of Scotland said it plans to sell the retail and commercial banking businesses of newly acquired ABN AMRO China, part of efforts to exit from these operations in Asia.
* U.S. Hartford Financial Services Group is in talks to sell most of its life insurance unit to Canadian Sun Life Financial Inc, Bloomberg reported, citing three people with knowledge of the matter.
* J Sainsbury, Britain’s third-biggest supermarket group, said it has bought 24 stores from smaller rival the Co-operative Group for 83 million pounds ($117 million).
* Private Greek carrier Aegean Airlines submitted a surprise offer to buy ailing state carrier Olympic Airlines, to rival a previous bid from Marfin Investment Group (MIG).
* Israeli flavors and fine ingredients maker Frutarom Industries Ltd said it agreed to acquire the U.S. company Flavors Specialties Inc (FSI) for $17.2 million.
* South Africa’s fourth-biggest bank Nedbank said it is in talks to buy Old Mutual Group’s interests in certain joint ventures in exchange for its shares.
* Australian coal seam gas firm Arrow Energy is considering its position in relation to its stake in and bid for rival Pure Energy Resources Ltd after Pure shareholder Royal Dutch Shell decided to sell to a rival bidder.
(PHOTO: Former Swiss finance minister Kaspar Villiger talks to the media after a briefing in Zurich March 4, 2009. REUTERS/Miro Kuzmanovic)