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[1/2] The logo of Swiss bank UBS is seen at an office building in Zurich, Switzerland, Oct. 25, 2022. REUTERS/Arnd WiegmannZURICH, Jan 31 (Reuters) - UBS (UBSG.S), Switzerland's biggest bank, forecast an uncertain year ahead due to the war in Ukraine and sagging client confidence on Tuesday, despite trumping expectations for 2022 with a $7.6 billion net profit. Zuercher Kantonalbank analyst Michael Klien said UBS had benefited from one-offs, including a lower than expected tax rate. SLOWDOWNUBS said it gained $23.3 billion in net new fee generating assets in wealth management, with a strong Swiss performance. UBS announced plans to buy back more than $5 billion worth of shares this year after repurchasing $5.5 billion in 2022.
[1/2] The logo of Swiss bank UBS is seen at an office building in Zurich, Switzerland, Oct. 25, 2022. REUTERS/Arnd WiegmannZURICH, Jan 31 (Reuters) - UBS Group AG (UBSG.S) predicted an "uncertain" year ahead plagued by accelerating inflation and higher interest rates on Tuesday after the Swiss bank beat estimates in its latest quarter. In doing so, UBS cautioned that inflation, rising interest rates and war in Ukraine were clouding the future, dampening clients' mood. Full-year net profit reached $7.6 billion, compared with the consensus estimate of $7.3 billion. UBS said it attracted $23.3 billion in net new fee generating assets in wealth management, with strong performance in Switzerland.
LONDON/FRANKFURT, Jan 27 (Reuters) - Rising borrowing costs are giving a long-awaited lift to Europe's beleaguered banks, but they come with a sting in the tail. Last year central banks ended a decade of rock-bottom interest rates as the U.S. Federal Reserve and then the European Central Bank moved towards tightening. But while rising rates are good news for bank profits, they herald a slowdown in an economy hit by war and runaway prices that squeeze borrowers and could prick pricing bubbles, most notably in property. "On the one hand, interest rates are going up, which is good and helps banks," said Jerome Legras of Axiom Alternative Investments. Germany's financial regulator BaFin recently warned that a rapid rise in interest rates could weigh on some banks, and that loans may sour.
LONDON/AMSTERDAM, Jan 23(Reuters) - Dutch insurer ASR (ASRNL.AS) will consider a sale of its banking arm after completing its acquisition of rival Aegon's (AEGN.AS) domestic operations, a source close to the matter told Reuters. The lending business, however, is likely to be put up for sale, given ASR's previous stance on banking operations, the source said on condition of anonymity because the discussions are private. ASR labelled its original banking arm, ASR Bank, as "non-core" in 2018 and sold part of it to rival Achmea the following year. Aegon Bank had 16.2 billion euros ($17.6 billion) in assets on its balance sheet at the end of 2021, with 735.2 million euros of equity. ASR paid 2.5 billion euros in cash for Aegon's Dutch operations, with Aegon to retain a 30% stake in the enlarged group.
BRUSSELS, Dec 16 (Reuters) - European Union states should buy arms jointly to replenish stocks after supplying Ukraine, said the bloc's defence agency, warning the United States may not always be able to shield Europe from threats. "The Russian war of aggression against Ukraine demonstrates our capability shortfalls," said Jiri Sedivy, chief executive of the European Defence Agency, an EU body that helps the bloc's governments to develop their military capabilities. The agency was in talks with European arms firms about boosting production, he said, as well as with countries about clubbing together to buy equipment and ammunition. Europe has had a splintered approach to defence, with countries mostly equipping their military on their own, spawning a patchwork of incompatible weapons and equipment. The war in Ukraine has confronted the region with its biggest challenge in a generation, exposing deep rifts in how to deal with Moscow.
Higher interest rates are fattening profits from regular banking, while there has been a decline in M&A deals. In both those years, the investment bank made close to 40% of revenue and more than 75% of pre-tax profit. The bank's corporate and retail businesses, meanwhile, stagnated under ultra-low interest rates that lasted longer than expected. Deutsche Bank is under scrutiny for its controls to prevent money laundering, said a person with direct knowledge of the matter. Deutsche Bank has also been under pressure from regulators to rein in its leveraged finance business, where credit is extended to already indebted borrowers.
Uniper (UN01.DE) has already booked billions of euros of losses on derivatives, exacerbating a crisis as it rushed to plug the gap left after Russia turned off the taps. Like other energy firms, Uniper uses derivatives, such as securing an option to sell gas at a set price in the future, to guard against energy price swings. "In total, we have derivative positions of about 216 billion euros as of September 30 2022," a spokesperson for Uniper said, adding that the riskier part of this was small. According to its accounts, Uniper held around 198 billion euros of receivables from derivative instruments as assets. It is also more than the 131 billion euros Germany's RWE (RWEG.DE) had at the end of June, public data shows.
Some, such as Belgium and Greece, as well as Hungary which still relies heavily on Russian energy imports, pushed back against further sweeping measures, EU diplomats told Reuters. Russia says sanctions have boomeranged against the West, driving up inflation as energy prices have rocketed higher. Meanwhile, existing EU measures are not always watertight. Others are more discrete, while some have half an eye on a future relationship with Russia after the war ends. German Chancellor Olaf Scholz said this month that the EU would "tighten the sanctions against Russia for as long as Putin continues his war".
UK watchdog narrows dividend-stripping investigation
  + stars: | 2022-12-15 | by ( Kirstin Ridley | )   time to read: +6 min
A German court this week sentenced tax lawyer Hanno Berger, alleged to have masterminded one of the country's biggest post-war frauds, to eight years in jail. It is the highest-profile prosecution and longest sentence to date in a series of trials that have also convicted British bankers. Although Britain was not impacted by cum-ex trading, much of the structuring and organising of the scheme took place in London, according to lawyers and authorities, some of whom turned to the country for help unpicking what had happened. It does not have the power to investigate tax fraud, but can investigate civil and criminal market abuse. One warning notice was sent in June 2020 to an unnamed former chief executive, according to a 2021 High Court judgment.
"The successful completion of the capital increase is a key milestone for the new Credit Suisse," its chief executive Ulrich Koerner said in a statement. Credit Suisse had already raised 1.8 billion francs by placing stock with a group of institutional investors led by Saudi National Bank (1180.SE). The exercise of subscription rights left only 16.4 million shares unsold. These are due to be sold on the market at or above the offer price of 2.52 Swiss francs, Credit Suisse said. Credit Suisse, has been battered by mishaps, including a $5.5 billion loss on U.S. investment firm Archegos.
Credit Suisse has already placed some 1.8 billion francs worth of shares with a group of institutional investors led by Saudi National Bank. "The rights issue is the necessary start to the process, said Jerome Legras of Axiom Alternative Investments. REVAMP AND RECORD LOWSCredit Suisse shares, which have plumbed record lows, were buoyed last week as its leadership sought to reassure markets. After closing above 3 Swiss francs on Monday, they have retreated slightly, finishing Wednesday’s session at 2.851 Swiss francs. Crucially, they have held above the deal subscription price of 2.52 Swiss francs and were at 2.821 Swiss francs, down around 1% in mid-session trade on Thursday.
The rise and fall of Wirecard
  + stars: | 2022-12-06 | by ( )   time to read: +5 min
July 2: The head of Germany's financial watchdog calls the accounting scandal at Wirecard "a massive criminal act". July 6: German prosecutors arrest the head of a Dubai-based subsidiary of Wirecard. 2021Jan. 29: Felix Hufeld, president of German financial watchdog BaFin, steps down. 2022Jan. 14: German prosecutors file first charges in Wirecard fraud, the Financial Times reports. Sept. 21: A Munich district court said it had admitted charges against former Wirecard executives, paving way for a trial.
Nov 28 (Reuters) - Credit Suisse bonds fell and the cost of insuring its debt against default rose on Monday as the Swiss bank struggled to win over rattled investors following an exodus of client cash and with more litigation on the horizon. The bank had also revealed in an official filing for a capital hike that the U.S. Federal Reserve had said it intended to pursue an investigation of Credit Suisse over collapsed U.S. investment firm Archegos. Credit Suisse CDS opened the year at 57 bps. The Federal Reserve announcement suggests the bank could face additional fines related to its connection to Archegos, whose collapse rocked Wall Street as its highly leveraged stock bets went sour. Credit Suisse's 4 billion franc capital raising is designed to help put the bank back back on track following the biggest crisis in its 166-year history.
FRANKFURT, Nov 25 (Reuters) - Germany's Deutsche Bank (DBKGn.DE) has a stark warning to European companies borrowing from U.S. lenders: They will drop you when times get tough. "There was evidence of non-German banks in this country taking lending off the table while German banks were going longer-credit during the pandemic, in 2020," he added, again without citing examples. Deutsche Bank has long highlighted a need for Europe to have strong banks to vie with U.S. and Chinese competitors, but the latest rhetoric signals a more aggressive tone. Campelli called for a "concerted approach" by politicians and regulators to support European banks. He said he wanted strong European banks in Germany and pushed back on being a mere U.S. bank.
Regulators and policymakers have been examining whether companies' use of such complex instruments, largely unregulated, threatens financial stability. "The volatility in ... energy markets ... has also affected the derivative markets which energy sector firms use to manage risk," the ECB said in its biannual Financial Stability Review, pointing to a concentration of such activity with a small number of big energy firms. The central bank said that about half of energy traders with power and gas derivatives could be hit with similar margin calls should prices rise. Policymakers in Brussels are also concerned and recently circulated a paper suggesting extending tough rules applied to banks to energy firms that trade derivatives. Energy companies say derivatives are chiefly to hedge or protect themselves against swings in prices.
The plans include the Bundesbank, Germany's central bank, hoarding extra billions to cope with a surge in demand, and possible limits on withdrawals, one of the people said. NO JUMPING THE LINEOne weakness that planning exposed involves security firms that transport money from the central bank to ATMs and banks. The organization hosted a meeting last week with central bank officials and lawmakers to press its case. At times politics can get in the way of blackout planning. He said that he has long been warning authorities of blackout risks but that planning has been inadequate.
But there was also a wider question for the officials: could the energy companies' use of such complex instruments threaten financial stability? So the ECB has widened its scrutiny to examine potential domino effects, including on the banks which it supervises. read moreWhile ECB President Christine Lagarde said the ECB stood ready to provide liquidity to banks, she said it would not do the same for energy firms. "Energy companies pose specific risks not only to financial stability. Reuters GraphicsRating agency Moody's, meanwhile, said that energy companies did not provide enough information about their derivatives.
ZURICH/NEW YORK, Oct 28 (Reuters) - After months of reflecting, Credit Suisse's chairman Axel Lehmann revealed an overhaul "to rebuild Credit Suisse as a strong ... bank with a firm foundation, rock-solid like our Swiss mountains". On Thursday, Credit Suisse outlined plans to raise 4 billion Swiss francs from investors, cut thousands of jobs and shift its focus from investment banking towards its rich clients. Credit Suisse said its clients pulled funds in recent weeks at a pace that led the lender to breach some regulatory requirements for liquidity, underscoring the deep impact of wild market swings and social media speculation about its health. It will separate its investment bank to create CS First Boston, focused on advisory work such as mergers and acquisitions and arranging deals on capital markets. And that's the pond that Credit Suisse is swimming in."
LONDON, Oct 27 (Reuters) - Seeking to restore vigour to a business that's been languishing, Credit Suisse (CSGN.S) says it will reshape its investment bank by resurrecting the First Boston brand. Still, Credit Suisse says it expects CS First Boston to generate 14% of total group revenue by 2025, starting with annual sales of about $2.5 billion. Credit Suisse has been plagued by an exodus of senior bankers over the past 18 months. Yet most trading activities will remain within Credit Suisse, raising questions on CSFB's ability to compete with the likes of Goldman Sachs and JPMorgan (JPM.N). Credit Suisse is hoping to eventually pursue an initial public offering of CSFB, Körner told analysts.
The troubled Swiss bank outlined what its chairman Axel Lehmann dubbed a "blueprint for success", after racking up a 4 billion Swiss franc loss in the third quarter of the year and following torrid weeks for the group. Saudi National Bank, the Kingdom's biggest lender, committed to invest up to 1.5 billion francs in Credit Suisse to achieve a shareholding of up to 9.9%. The Swiss bank said it also aims to separate out its investment bank to create CS First Boston, focused on advisory and capital markets, and hopes to attract third-party capital and set up a partnership with the new Credit Suisse. Credit Suisse said it will create a capital release unit to wind down non-strategic, higher-risk businesses, while announcing the sale of a large part of its securitised products business. Credit Suisse needs to revamp after a series of costly and morale-sapping blunders that triggered a wholesale change of management, a halt in dividend payments and an urgent rethink about its future.
And Italy's UniCredit (CRDI.MI) raised its 2022 profit goal, helped by higher interest rates and lower loan loss provisions that also drove quarterly earnings above forecasts. For years, banks bemoaned ultra loose monetary policy, but now higher interest rates means banks can start to benefit from the increased gap between what they charge borrowers and what they pay savers. Standard Chartered's third-quarter profit surged 40% as higher interest rates boosted the emerging markets-focused bank's income, giving it ammunition to upgrade its revenue outlook despite a weakening global economy. For Santander, higher loan loss provisions in key markets like Brazil and the United States overshadowed better than expected third-quarter earnings. While benefiting from higher interest rates, banks also face the unwinding of a scheme that buoyed their profits for years.
Oct 21 (Reuters) - Investors have been adding to bets that Credit Suisse's shares still have further to fall after a social media storm forced a fresh look at the Swiss lender's problems. Credit Suisse declined to comment. In terms of financial firms subject to the highest amount of short selling, Credit Suisse currently stands fourth behind investment firms T. Rowe Price, BlackRock and Blackstone, according to data specialist FIS. Reuters Graphics"Retail investors were all over developments in Credit Suisse," said Ivan Ćosović, founder of data group Breakout Point, which tracks the sentiment of retail traders on platforms like Reddit. Credit Suisse was the subject of a flood of unsubstantiated rumours and critical memes including titles such as: "Everything is Fine?"
LONDON, Oct 20 (Reuters) - Insurance for humanitarian workers, journalists, engineers and others heading to Ukraine is now more expensive and harder to organise than during the Iraq war. The United Nations and other aid organisations in Ukraine said last week that the missile attacks had disrupted their humanitarian work. A shortage of providers is also adding to insurance costs, sources said, pointing in particular to reluctance among some U.S. insurers to offer Ukraine cover. AIG (AIG.N), which declined to comment, was drawing up broad exclusion clauses for Russia and Ukraine, Reuters reported earlier this year. ($1 = 1.0206 euros)Register now for FREE unlimited access to RegisterEditing by John O'Donnell and Kirsten DonovanOur Standards: The Thomson Reuters Trust Principles.
A clock is seen near the logo of Swiss bank Credit Suisse at the Paradeplatz square in Zurich, Switzerland October 5, 2022. Credit Suisse is also considering spinning off part of its advisory and investment banking business, which could bring in outside investors and be named First Boston, Bloomberg has reported. If such deals do not materialize or fall short of expectations, Credit Suisse will go for a capital increase, said that person. "I am more worried that Credit Suisse will be bought at a bargain price by an American bank," he said. Ray Soudah, Chairman of Swiss mergers and acquisitions specialist Millenium Associates, said disposals risked making Credit Suisse "an even greater target".
A clock is seen near the logo of Swiss bank Credit Suisse at the Paradeplatz square in Zurich, Switzerland October 5, 2022. Abu Dhabi and Saudi Arabia were weighing up, through their sovereign wealth funds, whether to put money into Credit Suisse's investment bank and other businesses, Bloomberg reported. A spokesperson for Credit Suisse declined to comment, reiterating that it will update on its strategy review when it announces third-quarter earnings. The largest Middle Eastern sovereign fund investor in Credit Suisse, the Qatar Investment Authority, declined to comment. The New Jersey case was the largest of its remaining exposure on its legacy RMBS business, Credit Suisse said, with five remaining cases, all far smaller, still in litigation.
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