UBS has announced that Credit Suisse CEO, Ulrich Koerner, will join the executive board of the combined entity once UBS’s emergency purchase of the bank is complete. The legal closure of the acquisition is expected within the next few weeks, and the combined entity will operate as a “consolidated banking group.” UBS will initially manage the two separate companies before each continues to operate its subsidiaries and branches. The UBS board of directors and executive board will hold responsibility for the consolidated group. Each division, function, and region will be represented by a board member reporting to UBS CEO Sergio Ermotti.
The Credit Suisse brand will operate independently for the “foreseeable future” as UBS integrates the business in a phased approach. With his knowledge of both organizations, Koerner will be responsible for ensuring Credit Suisse’s operational continuity and client focus while supporting the integration process. The combined firm will operate with five business divisions, seven functions, four regions, and Credit Suisse. UBS veteran Todd Tuckner will become CFO for the group, taking over from Sarah Youngwood, who has decided to step down after the transaction closes.
Regulators worldwide will gather today to discuss how best to prevent banks from becoming “too big to fail”. A group of lawmakers, central bankers, and academics are expected to support a blueprint put forward by the Bank of England proposing that a failing bank should be kept alive using temporary public finances. The financier who chaired a panel of experts advising the UK government on bank bailouts during the financial crisis, Sir David Walker, said: “The stability of the financial system still requires resolution authorities with the power to deal with bank failures in an orderly way without systemic contagion”. US Federal Reserve governor, Jerome Powell, has argued that the idea of breaking up big banks was simplistic, but he added that ramping up capital requirements was a sensible move.
The appeal court in Italy has ruled that a former Monte dei Paschi CEO, Giuseppe Mussari, should stand trial for obstructing regulators over two controversial derivatives trades. The trades, made by the bank in 2008, wiped out over €730m from Monte dei Paschi’s accounts. Mussari was charged with obstruction of regulators in December 2014. 12 other former executives, including a former head of finance, Gian Luca Baldassarri, and former director general, Antonio Vigni, will also face trial. It is considered the first time any individuals will be held accountable for the collapse of the world’s oldest bank.
Deutsche Bank may soon have to face investigations into its role as a possible conduit for moving illicit funds out of Russia. Deutsche is already the subject of an inquiry into alleged breaches of sanctions in Iran and other countries. According to reports in Germany, regulators are investigating whether the $10bn mirror trades executed through the bank/FBME Bank in Cyprus between 2012 and 2014 were a means of laundering money. Deutsche itself has refused to comment on the reports.
The Pensions Regulator in the UK is to investigate BHS pension scheme payments made by owner Philip Green. Green sold BHS in 2015 for £1 to Dominic Chappell, who then ran the retailer into the ground, resulting in 11,000 job losses. The Pensions Regulator has revealed it was informed two days before the sale of BHS that the company would go into administration – despite statements by Green that the pension liabilities had been dealt with. Green is thought to have extracted £400m from BHS before selling it and seeing it fall into administration.
The Indonesian government has added to its taxes on tobacco and “sin products”, including beer and spirits. Indonesia is the eighth-largest market in the world for cigarettes, and the move is aimed, in part, at raising the revenue to finance infrastructure projects. Earlier this year, the government of President Joko Widodo raised the tax on tobacco products by up to 12.5% and on beer and spirits by 10% and has now announced a 35% tax on “sweetened drinks”, including Coca-Cola and Pepsi.
According to the Russian central bank, capital outflow from Russia dropped by 55% in 2015 to $56.9bn, with the bank attributing the improvement to successful currency controls and rising investor confidence. In 2014, outflows reached $154.1bn. However, the central bank expects outflows to rise again this year due to global economic instability.
