Credit Suisse under siege
AS FAR as we know, the 17 British banks implicated in the Laundromat Russian money-laundering scandal have escaped the attention of the British authorities even though there could be a big pay day for HMRC and the exchequer.
Credit Suisse is not so lucky. The Swiss banks, including the Geneva branch of HSBC, have a long history of hiding dodgy money from prying eyes.
There was an assumption that the game was up with the dump of the Panama Papers and the settlement reached between the Swiss banks and the American government over the sheltering of US tax avoiders, for which Credit Suisse paid a $2.6bn fine.
As if Credit Suisse’s high-profile chief executive Tidjane Thiam didn’t have enough problems on his hands, his bank faces probes by tax enforcers across Europe. Dutch prosecutors seized jewellery, paintings and gold ingots from Credit Suisse branches as part of what was described as a money-laundering probe.
One of the curiosities of this is that prosecutors and tax authorities from London to Sydney look to be in the investigation, but Switzerland seems to have been out of the loop with the attorney-general’s office indignant at its omission. The implication is that the tax authorities in Britain, France and the Netherlands don’t quite trust them to police their banks as thoroughly as expected, post crisis.
The reputational damage to Credit Suisse will be considerable. Under Thiam’s guidance, the bank raised some £4bn from investors in 2015 to strengthen capital and made much of its goal of being one of the world’s top wealth managers with an eye on Asia. Re-establishing trust will be a big ask.
Cutting loose
JOLLY good that Philip Hammond has managed to boost Treasury coffers by £11.8bn through selling a chunk of the Bradford & Bingley buy- to- let loans acquired during the financial crisis. Buyers Blackstone and Prudential have provided assurances that mortgage borrowers will face no change of conditions.
Nevertheless, it is odd that the Government is being shy in describing how much cash will be coming from which prospective owner and how the booty has been divided. The Treasury hides under the rubric of commercial secrecy, even though with the large number of potential buyers there can be very little that remains unknown in the City.
The deal by no means gets the Government fully off the B&B hook. More sales will be required before the Treasury fully clears the £15.6bn debt to the Financial Services Compensation Authority taken on by Gordon Brown at the time of B&B’s collapse.
All of this is a mere bagatelle when compared to the Government’s still moribund 71.3pc holding in RBS. When it starts shifting that, there may be a case for the taxpayer to begin forgiving the bankers.
Doubling down
SELLING the £11bn zero premium merger of Standard Life and Aberdeen Asset Management to shareholders is proving an uphill struggle. Terrible twins Martin Gilbert and Keith Skeoch, who aim to be joint chief executives, are being given a torrid time by media, analysts and investors alike. Indeed, in presentations the protagonists have taken to pointing to the US examples of Apple, Whole Foods and Microsoft as cases where such a set-up has worked.
Maybe, but they are not exactly parallels to the world of savings.
Where the merger does seem to make some sense is that it does create a credible scale player in asset management, which is increasingly divided between big beasts and boutiques. But for this to work, it is going to require ruthless cost-cutting – and neither side seems willing to face up to that.
One also needs to buy into a narrative that says low- cost passive management has passed its peak and active investing, especially in high-saving Asia, is the go-to model.
Its huge rival Blackrock clearly differs, following its decision to replace people with computer code.
Diplomatic coup
WHICH is the fastest-growing big confectionery company in the world? As Mars, Hershey, Nestle and Cadbury-owner Mondelez struggle to grow, racing ahead is Italy’s privately owned Ferrero (now the owner of Thorntons).
The company is marking its maturity by family scion Giovanni Ferrero choosing an outside chief executive, Lapo Civiletti, as his successor. Fantastico.