SWISS FINANCIAL SERVICES NEWSLETTER A shift in corporate culture Special Edition Banking January 2013
KPeople 2010 | 03
Contents 04 08 12 18
Strategic change in Swiss Private Banking a transformation in fast motion
Change Management in Banks Culture, Compliance and Compensation
Panel Diskussion Dealing with change – a practical perspective
Financial Industry in Crisis The industry's chance to regain its footing
A shift in corporate culture as a strategic success factor?
Private Banking in Luxembourg A business under transformation
Designation of Tax Crimes as Money Laundering Predicate Offences Singapore takes a bold move – what about Switzerland?
Little Consolidation Activity in Swiss Private Banking Tempestuous times, with no silver lining in sight
GIPS 2010: erste Erfahrungswerte
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Editorial Dear Reader, Is becoming a banker no longer a dream come true? Clientsâ€™ dropping confidence has to be propped up with new regulations, and the freedom experienced by traditional private bankers in the heyday 80s and 90s has given way to strict management informed by regulations, cost management, control processes, shrinking margins and serious competition. But this does not seem to be a reason for complaining if you listen to a new generation of ambitious and responsible bankers who joined us in a roundtable discussion transcribed on page 12 of the latest edition of our Swiss Financial Services Newsletter. Managing a bank in the current shift in paradigm means changing corporate culture, thus bringing the company into a new era with a modern management style that takes into account client needs and employee motivations. But changing a companyâ€™s corporate culture is a complex undertaking as Robert Straw, Ph. D., Head Banking Strategy and Operations at KPMG describes in his refreshing take on the subject starting on page 8: he argues that a company must capture employeesâ€™ hearts which are, however, closely connected to their hands and heads. The loyalty of bank employees is unsurpassed. However, the most convincing argument for this, namely high employment security and compensation to match are no longer as irrevocable as they once were because these jobs are becoming more and more like any other job in the industry or in services. The current and expected tightening of regulations, as well as the pressure coming from abroad to give up a Swiss specialty, the much famed banking secrecy, should be seen as an opportunity rather than as a threat. After all, there is nothing wrong with regulations as they provide more clarity for the banks in Switzerland and abroad, improving the predictability of their daily life and processes, thus making it easier to fulfill targets. Speaking of international: Luxembourg is as important a market for financial and banking products as Switzerland is, just eight to ten times smaller. Despite this difference in size, the problems Luxembourg faces are comparable to those of Switzerland with the difference that Luxembourg has already started dealing with them intensively, implementing a farsighted economic and financial policy, making it a global
center for investment funds. Read up on these exciting new developments in the article by Alain Picquet, Head of Advisory of KPMG in Luxembourg on page 24. What is decisive for all financial centers of the world, and especially for Switzerland, is the repositioning of Swiss private banks as open, modern financial institutions that are best-in-class in both virtual distribution channels as well as in the flesh-and-blood activities of acquisition and client relationship management. It is clear that in a world that is being transparent about taxes, there is a great need to structure the massively growing private assets worldwide. However, this development will not necessarily take place in Zurich, Geneva, Basel or Lugano but in Brazil, India, China or Russia. One thing is sure: change in the financial sector will also be a permanent fixture in our lives in this year. We hope the present Swiss Financial Services Newsletter will provide food for thought and inspiration for your daily business. Sincerely,
Daniel Senn Head of Financial Services, KPMG Switzerland
Strategic change in Swiss Private Banking a transformation in fast motion by Prof. Dr. Dr. Tomi Laamanen, Dr. Markus Schimmer, Emmanuelle Reuter, Universität St. Gallen
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Existing business models under pressure For decades Swiss private banks were highly profitable thanks to their excellent reputation and favorable market conditions. However, since the global banking crisis of 2008/2009 and the ensuing sovereign debt crisis in Europe, the industry's economic outlook has dampened abruptly and regulatory pitfalls are becoming deeper. Many banks are facing enormous economic challenges. Return on equity has dropped across the different market segments from an average 15% in 2006 to an alarming 5% in 2011, despite a temporary recovery in 2010. Of course, Swiss private banks are not the only ones having to deal with these dramatic developments. Higher capital adequacy requirements and sinking client confidence afflict banks worldwide. However, Swiss Private banks have come under distinctly severe pressure to strategically realign their business models. There are two main reasons for this. The de facto collapse of the Swiss banking secrecy and the dynamic evolution of client needs challenge the range of services currently on offer.
It is difficult to say how a bank can survive this transitional phase or even emerge from it strengthened. Often the cost base is scrutinized first, as it is the company's profitability driver that is easiest to influence. In view of the great need for correction, the industry is sometimes called upon to undergo an “industrialization“ process. However, this suggestion ignores other underlying causes of this crisis as well as the historical characteristics of the Swiss private banking industry. Underlying the banks' profitability problem stands society's loss of confidence in the capital markets and banks, as well as a global shift in regulations. These considerations should be at the heart of the strategies developed in the aftermath of the crisis and give rise to measures addressing specific priorities. The following table juxtaposes these areas of action next to the individual crisis characteristics.
Areas for action
Cost-cutting programs: • Release of resources for core strategic renewals
• Adverse cost structures due to the strength of the Swiss franc • Increased regulatory requirements • Sinking profit margins (often in foreign currencies) • Outflows of untaxed assets
More active portfolio management: • Restructuring of the business portfolios, the geographical orientation and the client segments Market consolidation: • Critical mass and economies of scale • Several alternatives through acquisitions or collaborations between companies
Loss of confidence:
• Highly politicized industry worldwide • Changes in clients‘ risk appetites and a decreased net influx of new money
• Focus on clients and their increasingly complex needs
Differentiated promises of client benefits:
• Intensified competitive environment at a national and increasingly also at an international level
• investments in the “Switzerland“ brand
Strategic change in Swiss private banking: – a transformation in fast motion
The “renewal“ of Swiss private banking For many private banks, the current crisis is a matter of survival. Measures to increase efficiency are inevitable to reduce the cost base. Such measures gain time and set free resources in the medium term. However, they do not solve the banks’ structural problems on the demand side. Thus, strategies focused on cost reduction alone will not prove to be very promising. Instead, current business models must also be adjusted to take account of the new business environment.
«Private Banks that proactively prepare for the industry developments and that take on an active role in the industry transformation process, will have the chance to create a sustainable basis for competitive advantage.» A pivotal obstacle to structural change is that our thinking and actions are oriented towards pursuing established practices rather than incorporating new information in view of its future importance. But change will only occur once banks can perceive, process and translate challenges into specific courses of action even when under time pressure. It is also crucial to see crises not only as dangers but also as opportunities to outcompete rivals (Schimmer 2012). This is especially true in the current situation, where economic challenges, regulatory circumstances and new technologies require a timely shift in thinking. A good starting point for this
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change may derive from altering client profiles, which poses the question: Will your client’s value proposition still be viable in the future? Once a bank has doubts in this regard, it needs to adjust its business models, potentially requiring a redesign of the value chain (cf. Müller-Stewens & Lechner, 2011). The client at the center of the service offering The banking crisis, scandals as well as their media exploitation for political ends have shaken the confidence in capital markets and banks. Clients have become more critical, are better informed and demand a sustainable performance of their money. Clients pulling their assets from a bank, or a bank experiencing problems attracting new clients are usually signs that a bank has problems meeting its customer value proposition. To tackle these issues, it is essential that banks restore clients’ lost confidence in their services. Beyond these challenges, banks need to account for several changes on client preferences when adapting business models. For example, clients have become more willing to pay for independent advisory services, as well as for a surcharge like “ethnic banking“. These developments have lead to profitable growth clusters for banks catering to these niche markets. A further development with growth potential is the clients increased ability and willingness to access private banking services online. In order to tap into these growth clusters, banks can either specialize in these, or aggregate multiple clusters using a platform strategy. We think the key elements for such strategies to be successful are: 1. services tailored to specific client groups should be designed as modules that complement each other 2. innovative pricing models 3. increased integration of the Internet to create new services and handle client processes
Reconstructing the value chain Changing business models may also imply the need to reconstruct the corporate value chain. There are six ways in how a company can adapt its value chain (Müller-Stewens & Fontin, 2002): 1. Focusing on specific skills and strengths by reducing the depth of the value chain 2. Integrating activities by merging individual stages of one or more value chains 3. Coordinating activities by managing complementary value chains
CONCLUSION In summary, the Swiss private banking industry is undergoing structural changes. Many banks are under extreme pressure to change. These days, most banks still resort to efficiency-enhancing measures and timid tweaks to their business models. However, in the medium term, these measures are likely to be supplanted by more profound reorganizations, such as mergers and acquisitions as well as more innovative business models. Banks which proactively engage in change have a chance to create a sustainable competitive advantage for their organizations and will thus emerge strengthened from the crisis.
4. Consolidating the creation of value by merging multiple stages of a value chain into a single value-adding stage 5. Expanding the industry's value chain by complementing the existing value chain 6. Redesigning the current process logic of the value chain to create an entirely new process logic Many banks are under tremendous pressure to change. For them, there seem to be two particularly appealing development options on the menu: the current cost pressure and the regulatory push to “open architecture“ suggest a specialization either in production or distribution. Higher profitability levels can be achieved by scaling the specific stages of the value chain. If this strategy is implemented consistently, it will mean divesting non-strategic activities, which in turn is likely to be a driver for increased M&A activities within the industry. Since numerous country exposures will also be under scrutiny, the market for these assets should become more dynamic, which will result in improved economies of scale in the industry also from a geographical point of view. Further valuable potential can be unlocked beyond a corporation’s own boundaries. Laamanen and Wallin (2009) showed that radical strategic renewals succeed if strategic alternatives are also developed beyond a corporation’s boundaries. Collaborations between companies in order to make better use of synergies across businesses, such as cross-selling to an existing client base, using a brand, or sharing the cost of developing products across companies, can improve the cost base for all participating companies. Besides permanent cooperations, temporary cooperations can also generate value. For example, the mediated exchange of AuM mandates is an efficient alternative to the costly restructuring through mergers and acquisitions.
Prof. Dr. Dr. Tomi Laamanen Universität St. Gallen +41 71 224 23 63 email@example.com Dr. Markus Schimmer Universität St. Gallen +41 71 224 39 16 firstname.lastname@example.org Emmanuelle Reuter MSc, MIB, Universität St. Gallen +41 71 224 23 79 email@example.com
Sources: Laamanen T., Wallin J. 2009. Cognitive dynamics of capability developmentpaths. Journal of Mana-gement Studies 46 (6): 950-981. Müller-Stewens, G. & Lechner, C. 2011. Strategisches Management. Wie strategische Initiativen zu Wandel führen. 4. Auflage, Stuttgart: Schäffer-Poeschel Verlag Müller-Stewens, G. & Fontin, M. 2002. Die Innovation des Geschäftsmodells – der unterschätzte vierte Weg. Arbeitspapier, Institut für Betriebswirtschaft, Universität St. Gallen Schimmer, M. (2012). From crisis to opportunity: How market shocks impact interfirm rivalry. Best Conference Paper Proceedings of the Annual Meeting of the Academy of Management. August 3-7, 2012, Boston, MA, USA.
Change Management in Banks Culture, Compliance and Compensation by Dr. Robert Straw
The Six-C-squeeze is a compilation of the six main challenges banks are currently undergoing, one could even argue, suffering. Banks and bankers are being squeezed tighter and tighter from every angle – choking the very life out of banks and bankers. Some of the squeeze is necessary. Some is over-done. Most of the issues are headline news in our daily papers – several are just beginning to emerge as important topics. All banks are under the Six-C-Squeeze regardless of where they are located or doing business. These are worldwide phenomena. “You can run but you cannot hide.” Most banks are not, or only under-equipped to handle most of the squeezes. Some are smart enough not to try and take shortcuts; others haven’t recovered from the initial shock that change is imminent. Some have their priorities misplaced or even wrong; others are world-class, first-movers. All banks are running into what we can call “distraction risk” – of not having a holistic, balanced approach to all the new challenges while still running the business. Most of these topics have been analyzed and discussed infinitely in other venues. I would like to focus on culture, compliance and compensation because these three topics have received less attention but are areas of change management and a cultural change process that cannot go unnoticed, despite all the “technical” changes banks are undergoing.
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THE “SIX-C-SQUEEZE“ Capital: Capital requirements are increasing – leaving less room for banks to be innovative. The pressure to increase real equity levels is increasing. Compliance: Complying to new rules allows banks, simply, to stay in business. We just have to do it – or get out of “that” business. Costs: As a result of the huge compliance costs, banks react by undertaking massive cost-cutting, efficiency-enhancing exercises – to various degrees of success. Clients: Clients are wary, savvy and decreasing in their loyalty because they feel that their needs are not being fully met, and at prices they do not deem fair. Culture: By culture, I mean people – our people. We are so busy taking care of all the other issues, that we run the risk of forgetting how all the changes are effecting and affecting our most precious resource. Compensation: The Holy Grail of banking is compensation. It is the last bastion of the legacy. It’s about to fall.
Cultural Change in Banks − From Authentic Creativity to Creative Authenticity There is a lot of talk about cultural change going on in banking. „We have to change how our people think”, said one C-level banker to me at lunch the other day. When I challenged him to what that really means, he was hard pressed to give concrete answers. Most banks can adapt to technicallyrelated change: systems, processes, and the like, but when it comes to people, they are in a quagmire. The following are several observations around the area of culture – people, that need addressing – and more importantly - need action in every bank. In dozens of meetings with bankers talking about their corporate, and even personal, challenges, I see some paradigms in their thought life and, for some, in their behavior. First, all bankers with whom I have spoken in the last months acknowledged that they are tired, overwhelmed, feeling stretched, having a hard time coping, running out of answers and struggling to make decisions. Not all in that order, but I think you get the picture. The speed of change required, combined with the complexity, and the sheer number of changes, is barely manageable for many banks and bankers. Second, no one I spoke with expects this to change anytime soon. In fact, most agree with me that the complexity challenge of dealing with the Six-C-Squeeze will continue to increase before it finally begins to taper off sometime in the distant (3+ years) future. One banker saying he had not had one Saturday off since last December, declined my invitation to an event because “I just have to sleep… and see my kids sometime …” He was particularly dejected. His dejection, lack of motivation is not uncommon these days amongst his colleagues as well.
Third, all of the men and women I spoke with are both creative and authentic – the former to various degrees, the latter consistently so. You can’t be “somewhat authentic.” You either are or you aren’t. Most believed in what they were doing at some point. Many now question it all. These women and men who are striving to give their best, are also declining in their creativity and their performance because of the increasing pressure on them – again, the SixC-Squeeze. Many are losing heart and so they begin to bluff their way through, or just don’t deliver. The number of burnout cases in banking continues to increase. And hence, for many, what was once authentic creativity is slowly but surely becoming creative authenticity. Many bankers who once were authentically creative, are now having to fake it, be creatively authentic, just to survive. Creating a Compliance Culture Professor Tom Tyler of Yale has done seminal work on why people follow rules. In his book, Why People Obey the Law, Tyler establishes the key role of legitimacy in shaping obedience to the law – and in our case, to compliance regulations. Typically, economists have found that carrots do not work, only sticks do in motivating compliance. In fact, in a recent and dismal conversation with a senior Business Risk manager, I was informed that sticks were the only way to force adherence to compliance rules. I am not so sure it is so simple. Tyler also found that people – including bankers – will take on the responsibility for obeying laws when asked to do so by a legitimate authority. In so many words, people become self-regulating. Most bankers follow the rules, but controls are often lacking or inadequate. And it only takes one “rogue trader” or incident to blow the reputation of the entire firm – as we have recently witnessed.
Change Management in Banken – Culture, Compliance and Compensation
Two points are worth consideration within this context. Namely, management should be a role-model for bank personnel – especially with regards to compliance. Full stop. Second, perhaps there is a link between generational differences and compliance. Millennials may follow compliance rules more easily than their older boomer counterparts because many joined banks after tougher compliance rules were implemented whereas many “cowboy” boomers don’t like fences around their prairies.
clients, then they will grasp onto it and implement it inherently because we all know that, within reason, the customer is king. But that is not a solid-enough argument for many who need a thorough change process.
The challenge is for senior management and internal learning and development teams to find ways to legitimize the new rules and regulations especially for front personnel. One of our clients, for example, chose to view MiFID as a business opportunity and not a regulation at all. If front personnel envision MiFID, for example, as doing a better job of caring for
So how does top management influence or create a compliance culture? Different from the technical issues surrounding costs and capital which are fairly rational processes, cultural change, especially when it affects virtually everyone, is subjective. There are no easy answers, and there are no universal answer to questions like “what should the ideal compliance culture of a global bank or cantonal bank look like?” The standard answer applies to all: it depends! It depends on context, on people, and a host of many other factors. I will repeat myself: corporate change and culture starts at the top!
Creating a Compliance Culture: Change Behavior in order to Change Thinking
• To put it in clear and simple terms. Banks need to make their work and processes:
John Shook’s award-winning work proves to be very instructive for banking as well in changing culture: • Start by changing what people do, how they behave, rather than how they think. Culture will change as a result. The traditional method of trying to get everyone to think the right way and then act accordingly does not work – especially if the reasons for the change are not deemed legitimate. It is easier to act your way to a new way of thinking than to think your way to a new way of acting. • If management wants our people to be successful, to find problems and to make improvements, we have the obligation to provide the means to do so. This means providing our people with the right work processes, systems, governance, and especially, leadership. If there are issues preventing staff to do their job, despite all the training, team heads, supervisors and compliance officers should be in a position to support, not squeeze, them. Such enabling encourages our people to improve quality and be engaged in problem solving and making improvements. The way management treats problems reflects your corporate and compliance culture. If Compliance is seen as the Internal Inquisition, you are lost. They must be seen and heard and counted on as supporting the business. • Changing behavior to change thinking – along with empowerment and management support – leads naturally to a change in values, attitude and ultimately in culture.
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–– Difficult to make a mistake; –– Simple to identify problems and to know when a mistake has occurred; –– Easy in the regular course of working to notify a manager or compliance of the mistake or problem; and –– The manager or compliance officer quickly determines what to do about it – and does it. • Communicate clearly to employees what their jobs are. Provide regular training to enable them to perform successfully. Build the carrot – and the stick – into the process. Build in quality improvement by empowering your people to expose issues, mistakes and errors. Ask why these happen, not who is responsible. Call attention to the problem to solve it, or to the behavior to change it. • Design the business to make it simpler. Make it simpler to do and simpler to see problems, simple to resolve problems, and simple to learn from mistakes. If we can make it simple to learn from our mistakes, this means changing our attitude toward them. Finally, explain and show how “doing the right thing” for clients means doing the right thing for yourself. • Finally, pay accordingly! This is the crux of cultural change.
Although context matters, there are sound processes that we use to help banks discover, enhance, and change their corporate culture in the direction of a compliance culture. And although systems are part of the change ingredients, I specifically refer to the people change process. Suffice it to say that there are no wholesale changes in corporate culture. Edgar Schein, inventor of the term “corporate culture”, has taught us that we cannot change culture by trying directly to change the culture. It is a result of other change processes, even if we have the world’s best systems and processes in place. Culture is an issue of the heart, but is closely connected to our hands and our heads!
«Compensation levels in banks will decrease in the coming years – probably up to 25 percent. This may come as a shock, but even after a 25 percent cut, average compensation will still be above other industries.» The Sixth C: The Holy Grail of Compensation There is an elephant in the room and it has a name: compensation. It is a proven fact and now common knowledge that total compensation in the financial services sector worldwide is far above the level of the real economy and industry. It remains a mystery why this is the case; and I have yet to see convincing arguments. Until now, banks have been reluctant to enter cost-cutting discussions with regard to compensation. To be fair, many banks are reducing the amount of cash bonuses paid out, extending the vesting time for stockoptions from two and three years to four and five years, but the overall level of compensation has not gone down. Our research shows that whereas overall cost-income ratios are slowly coming down on average for all Swiss banks, personnel expenses for all Swiss banks have stayed almost flat for the period 2007 - 2011. Accounting for almost 50 percent of total expenses, compensation, both fixed and total, must and will come down in the next years for the banking sector – in Switzerland and abroad. External pressure on compensation is already being exerted, but it is fair to say that no CEO or Board has been ready to significantly cut costs in this regard to date. Leadership starts at the top and by example.
may be the saving grace for some CEO’s who cannot or will not make the first move. The fact that many banks are undergoing huge rationalization processes (read layoffs), gives banks an ace in the hand: if you want to keep your job, you will have to accept less pay to do so. Either way, voluntarily or mandated, compensation levels in banks will decrease in the coming years – probably up to 25 percent. This may come as a shock, but even after a 25 percent cut, average compensation will still be above other industries.
CONCLUSION Typically, there are rational conclusions presented. However, with these three “squeezes”, it is difficult to impossible to come up with definitive conclusions other than to say: to be continued, or work in progress. What is conclusive is that the Six-C-Squeeze is hitting all banks to various degrees. Cultural change, the creation of a compliance culture and the imminent reduction in banking compensation are, or will affect, all bank employees. There are clear processes and techniques for change. Waiting out the storm is not a realistic solution. Smart banks and bankers will change their course in order to outrun these three storm fronts.
Dr. Robert Straw Director Head of Banking Strategy & Operations +41 58 249 42 76 firstname.lastname@example.org
Sources: “How to Change a Culture: Lessons from NUUMI”. John Shook. MITSloan Management Review, Winter 2010, Vol. 51, No. 2, pp. 63-68. http://www.oecd.org/employment/employmentpoliciesanddata/ageingandemploymentpolicies.htm https://www.vskbnet.ch/_downloads/pr/medien_vskb/2012/Medienmitteilung_241012_de.pdf Why People Obey the Law. Tom Tyler. Princeton: Princeton University Press, 2006. ISBN: 978-0691126739.
Having said that, none of this is surprising. For such an endeavor would be considered by all staff to be an “act of treason” and it must start with the CEO. As banks have financial results that more-and-more resemble that of a utility, what other choice does one have? Additionally, there is a prisoner’s dilemma aspect to be considered: no one wants to be the first to “confess” that they and their staff are being overpaid, and they are worried that no one follows suit. So regulating pay
Panel discussion Dealing with change – a practical perspective by Hans Stamm / Dr. Rob Straw (Interview was conducted in German)
Hans Stamm: The increasing regulatory pressure could keep boards of directors, management committees and client advisors from doing their jobs regarding client relationship management and acquisition. How have you adjusted your respective business models to meet these new challenges?
markets but instead, focus on certain markets. This means that you have to adjust your range of products. We therefore have to manage our employees according to processes and systems, i.e. how should a client profile be recorded? What type of risk information must a client receive and how is this documented? Which products are suitable for the client on hand? What must be kept in the back of one's mind when selling this or that product? This is where managing with technology and processes in mind comes into play.
Burkhard Varnholt: The situation is similar to what the industrial sector had gone through in recent years, albeit for other reasons. However, the background is always the same: processes are simplified with the help of technology. Once this is possible, a client advisor can again find the time to concentrate on clients. It is not possible to change regulatory duties and requirements, but so far, most banks and asset managers do not yet have the processes in place, and for this, technology is very important.
Urs Ruoss: That's an excellent summary. It is also due to regulatory duties and requirements that IT has to adapt constantly, i.e. that we have to keep on developing our applications. This helps make processes leaner and increase efficiency as more complex requirements are offset with more rational work methods. But that is only part of the story. For me, there are three pillars.
Daniel Previdoli: I can only second this! More stringent regulations have been a trend for some time now and the only way to satisfy the requirements is with more system and more focus. A good way to start is not to be active in all
Dr. Robert Straw / Hans Stamm, KPMG AG
The first pillar is IT, the second the specialization of the client advisors because client advisors can no longer help clients in all segments − that's over! − and the third one is the organization of work. Here I am thinking of highly qualified assistants who support the client advisors. If this work is optimized, client advisors can still focus on sales and acquisitions.
Hans Stamm: So are banks relatively well organized to meet this challenge or are they scrambling to do so now? Daniel Previdoli: On the one hand, our industry will have to start becoming more efficient by increasing our industrialization, standardization and centralization; on the other hand, our sales force will have to be more aware of processes, not least due to new regulations. Urs Ruoss: I would like to compare this to the work a medical doctor does. A medical doctor once said that the most important thing he had learnt was typing with ten fingers as, these days, you have to prepare a report for everything and anything, despite the fact that this really is not the core competence of a doctor. This situation is indeed comparable to the one of a client advisor, except that maybe our client advisors know how to type better.
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common sense so that their sole reason for being is to maximize their profits. Clients often feel that banks do not act in their interests but that they are being instrumentalized by them. I am convinced that the reason for all of this regulation, whether this be in relation to capital resources, liquidity, consumer protection, etc., has to do with the lost confidence in banks. Frankly, I am not sure that banks would indeed have reformed as quickly had it not been for the pressure from the regulator. Urs Ruoss: But don't forget that even if we only communicate with a client by e-mail, this may require a contractual agreement to be signed. Clients do not always understand the reason for this. These are the aspects that I find the most difficult to swallow in my daily business. Daniel Previdoli: Yes, but even there, eventually some countermeasures will have to be implemented. If we just transfer the risk to the client all the time, the client›s perception of banks will only deteriorate further. Each contract will then become a technical operation. Urs Ruoss, Credit Suisse
Rob Straw: Regulations were one of the main reasons for the current changes but what I have heard so far is really common sense: Process optimization, IT systems, etc. It seems that we need external pressure to go in the right direction, is that so? Burkhard Varnholt: Well, many aspects would also change without this external pressure but purely due to competitive reasons. There really are very many banks and there is hardly an industry with so much competition going on. According to a paper given by the Chief of Logistics of the German Postbank, there are 8000 banks in Germany alone. As far as I have understood, the German automotive industry is dominated by three heavyweights: Volkswagen, BMW and Mercedes. I don't think there are many more. So for banks, there is this competition due to the extreme number of banks and due to the interest rates that are tending towards zero, which means that the revenue is going towards zero, too. All of a sudden we are finding that semi-fixed costs have become much more important factors than they were in the golden 80s and 90s. In the end, it is a merciless environment and it is only going to get worse. We have this whole zero-interest environment which is related to the fiscal depression, and fiscal depression usually also means the repression of the financial sector. The truth is that the financial sector has a hard time dealing with low and flattened interest rate curves. It is rather unfortunate that all of these factors are converging, i.e. regulation is increasing exponentially, as is the competitive pressure from the market and competition. Daniel Previdoli: I also believe that all of this regulation is a reaction to the deep mistrust towards the entire industry. Society feels that banks no longer act ethically and with
Rob Straw: How do you decide in which market and client segments you wish to be active? Burkhard Varnholt: The market dictates that. I recently saw statistics released by the SNB that showed that out of 250 banks in Switzerland about 50 were in the red last year. In three out of five cases, I would guess that this has to do with a lack of focus. Daniel Previdoli: These days, there is no longer any tolerance margin when it comes to “compliance“ and “fulfilling regulatory standards“. This has simply become an economic calculation. Imagine what it costs to handle 19 clients in Venezuela. Then you know from the get-go that this is simply not doable. We at Zürcher Kantonalbank firmly believe in the full-service bank model and consciously maintain this, naturally with a healthy focus. In the future, this focus will not only be on certain markets but also on specific parts of the value chain. Certain services will be delegated to third parties that have a clear competence in this part of the value chain. Urs Ruoss: I am quite sure that Swiss banks have been adjusting to the new situation at different paces, especially in regard to cross-border services. Client advisors can no longer serve clients from all countries. In the future, client advisors will only serve clients from certain markets and will be certified to do this. Onshore private banking in Switzerland has also become much more complex and more regulated, which means that client advisors have to be much more specialized and focused. Recently, banks also have been paying outsourcing much more heed: in certain cases it may indeed make more sense to buy certain services rather than provide them oneself. Daniel Previdoli: I am quite sure that in 20 years, there will be banks that will mostly concentrate on a certain client segment and will buy most other services.
Panel discussion – Dealing with change – a practical perspective
Rob Straw: How can you motivate employees under such difficult circumstances? Can we really change employees currently on board ? How should this be done? Urs Ruoss: I just read this week that becoming a banker is no longer a dream job in Germany. Apparently, German banks are having an increasingly hard time to find adequately trained staff. Thankfully, this is not the case in Switzerland. A job with a bank is still considered to be prestigious, whether this be for apprentices or for graduates. This makes us hopeful for the future, as the future generation seems to take it in stride. Many youngsters are wide awake and eager to learn, which is why they enjoy working for a bank. Interestingly, we have not made out an image crisis in the employment market yet. I would also like to lose a few words on training. These days, our employees are certified, whether they are active as assistants or in client advisory services. This improves control as well as performance reports and encourages comparisons. These days, benchmarking is an important element for behavior management of staff. Burkhard Varnholt: I think I am correct when I say that people do not change. Even if we swear each New Year›s eve that we will address our three biggest weaknesses, this usually remains wishful thinking. You can train staff but the rest is up to management. Ideally, you can define an organization so that every employee does what she or he does best and enjoys doing. The level of education is steadily increasing and remains an important aspect, but let›s face it, we all function differently. Processes change all the time which automatically changes the organization and that is when a management team has to act more like a sports coach and pick his or her team so that each person can bring in their strengths. Daniel Previdoli: Of course, it is a manager's duty to train, empower and support employees so that they will be able to meet the challenges of this changing environment head-on. This includes explaining the bank›s vision and strategy as well as the reason for these changes. But the game is getting faster and faster... regulatory changes are being chased by technological changes. The trend to increase digitalization comes to mind. Clients will interact differently with the bank in 5-10 years.
Hans Stamm: How can you be sure that client advisors always understand and know the regulations? Daniel Previdoli: Our client advisors have never attended as many training sessions as in the last few years: process trainings, product trainings, certifications, etc. In the future, it will no longer be possible to sell all products and services in every form. Instead, it will become highly modularized, standardized and industrialized so that you can settle according to process, thus offering fair prices. Client advisors will have to learn this. Digitalization is another topic that will become more important. In the future, clients will want to have access to their bank day and night and they will be very well
14 – SWISS FINANCIAL SERVICES NEWSLETTER – January 2013
Burkhard Varnholt, Bank Sarasin & Cie AG / Daniel Previdoli, Zurich Cantonal Bank
informed - as they are already now! If a client is really interested, he or she will sometimes know more on a certain subject than the client advisor. Clients are becoming more and more demanding. This will also increase transparency. Urs Ruoss: Training is central. Just today, I got an e-mail informing me that all employees will have to do three mandatory trainings as online courses during the next quarter. And mandatory means mandatory with us. Staff that does not complete the course will be sanctioned.
Hans Stamm: How do you personally handle this change? Wasn't it more interesting to work with less regulation? Urs Ruoss: I can confirm that we often discuss amongst ourselves whether a job in banking has lost its attractiveness compared to a job in the industry, let's say as CFO. On the one hand, I would say, let's not kid ourselves: banking has undergone a change. But other industries have also undergone tremendous changes. Daniel Previdoli: I feel quite comfortable as a change manager. I like changing something for the better. Of course there are often big challenges where we have to think carefully how a bank should handle these. But this also brings with it many opportunities to change something for the better. So in this sense, indeed, we are living in interesting times. Burkhard Varnholt: I can honestly say that the current market environment has not made me regret my work at all. I still think banking is exciting, something I have always been passionate about and I have never wanted to do anything else. I still believe − and maybe I am a bit blue-eyed in this respect − that if you apply common sense with a certain technical training and honesty then these regulations do not affect you much. The rules, as a matter of fact, do not contain many surprises but just prescribe common sense.
Burkhard Varnholt: This indeed is the sustainability so many talk about. If this is the qualitative basis, and this self-understanding, this claim in regard to being honest and upright is the common denominator in values, not much can go wrong. In doing this, one should not forget that it is important to have a culture where mistakes are allowed and a manager is responsible for the team›s mistakes. As they say: you can't make an omelette without breaking eggs. What is important is that you offer a values framework that everyone can live by. Urs Ruoss: I agree, tone at the top is of the essence. These days, performance is measured not only quantitatively but also qualitatively. Reaching a financial goal is not the end in itself. It should also be said that the best client advisor is not necessarily also the best line manager. This is why it is so important to train the right potential successors early on.
Hans Stamm: I see that you perceive this change as something positive. How do you motivate your employees to see it from that perspective, as well? Burkhard Varnholt: It is especially with young people that you sometimes have to help them find their common sense. They are easily swamped because after graduating from university and with a couple of years of professional work under their belt, regulations seem like a “paragraph jungle“ where employees sometimes feel lost. People who have been in the business for a bit longer have an easier time handling this kind of change as they probably can judge better whether something is right or wrong.
Hans Stamm: Do you actively support people during this period of change? If yes, how?
Rob Straw: What will your bank look like in 2020? What will have changed? Daniel Previdoli: Today, we are a bank with a dense network of branches and we are also present with online channels. Most likely, this will shift in favor of online presence while still offering physical presence. Probably, this will only come into play in the case of more complicated cases. There will be changes but the hybrid model of bricks and clicks will always remain. This will also mean that our clientele will become increasingly savvy as they will use whichever channel is of preference anytime. Mobile banking will facilitate this. Most likely it will be an entire network where the client will act, not individual channels, so that it will reflect his or her needs. It will be a challenge to define who will be in charge of which client and who will bear the costs. Moreover, as mentioned previously, I expect that by 2020 we will be much more efficient in as far as processes and technology is concerned, which is why services will become cheaper.
Burkhard Varnholt: I think this depends on the situation and must be handled by each manager as they see fit in their particular department. Daniel Previdoli: In my opinion, this has a lot to do with corporate culture. At Zürcher Kantonalbank our slogan, „personal, competent and responsible“ is more than mere catchwords. These are values that are lived every day by our staff. Of course, it does not mean that you always have to be of the same opinion but speaking to each other should always be based on mutual trust, focused on the long run and therefore be predictable for all involved. In this kind of setting, employees are not only willing to change but will also be ready to initiate change and help others go through it.
15 Burkhard Varnholt, Bank Sarasin & Cie AG
Panel discussion – Dealing with change – a practical perspective
Urs Ruoss: I also expect that the younger generation will prefer mobile banking. The older generation is also becoming increasingly familiar with the internet. Nevertheless, the personal touch is often much appreciated. This is why we also concentrate on the personal advisor approach, also in the future. Having access to a broad range of financial products is essential. This is why it is of the essence that the client advisor understands the client relationship and all of its financial aspirations. On the whole, I expect client wishes to become increasingly diverse, depending on their age, their situation and their habits. Burkhard Varnholt: I believe that in 2020, the banking services industry will have doubled, simply due to the global economic growth. However, most of this growth will be in emerging markets, which will bring about a further split along the lines of domestic and international players. Market barriers will most likely still exist in 2020 and may well be stronger then than they are now. They will be responsible for generating stronger national markets whilst private banking will probably remain a very global business. Technology is changing the business drastically, so that banks will most likely focus more on payment and asset management service. Moreover, there will be different strategies in order to maintain the margins at the same level as today. As long as interest rates are as low as they currently are, banks will not have much of an opportunity to make money with their own balance sheet assets. The margins will probably be highest in asset management and private banking as well as in investment banking, as this highly personalized business generates the most chargeable hours. The other business segments will become interesting with their economies of scale facilitated by technology. Any bank which knows how to harness this can make a lot of money in this segment. All of these aspects will reshape the industry as we know it and create new competitions. However, a bank can still specialize in a number of business segments and frankly, that is the threat but also the opportunity we are currently facing.
16 – SWISS FINANCIAL SERVICES NEWSLETTER – January 2013
Daniel Previdoli, Zürcher Kantonalbank
Daniel Previdoli Daniel Previdoli, born in 1962, has been head of Retail Banking of the Cantonal Bank of Zurich since 2007. He worked for UBS AG in Zurich from 1996 to 2007. Daniel Previdoli acted as managing director of retail and corporate banking for the Zurich region. Before that, he was head of Recovery Management Primaries. From 1987 to 1996, he held various local and international positions for Credit Suisse AG, among others in risk management, credit analysis and large and medium-sized commercial customers. He studied economics and social sciences at the University of Fribourg, graduated from the International Banking School in New York, USA, and attended an Advanced Management Program at Harvard Business School in Boston, USA. He is vice president of the foundation board of Greater Zurich Area Foundation, Zurich, and a member of the board of directors of homegate AG, Adliswil. Urs Ruoss Urs Ruoss, born in 1957, resides in Lucerne. Since joining Credit Suisse in 1980, he has held various leading positions at the Business School. Later on, he held leading positions in retail banking and since 2003, in private banking, where he held the title of Head of Private Banking for the region Lucerne, Obwalden and Nidwalden. Urs Ruoss holds an MBA from the University of Liverpool and has acted as lecturer at the Swiss Finance Institute for years. He has co-chaired the bank›s Women’s Forum Switzerland and authored the first basic book for banking apprentices, which now appears under the title ”Banking Today“. Burkhard Varnholt Burkhard Varnholt, born in 1968; German national, residing in Zurich, Switzerland; holds a Ph. D. in Economics from the University of St. Gall (HSG). Prior to joining Bank Sarasin & Cie AG, Burkhard Varnholt had worked for Credit Suisse, where he last was a member of the Global Executive Council. Before that, he was an investment banker with Morgan Stanley in London. Burkhard Varnholt graduated from the University of St. Gall (HSG)., where he still acts as a lecturer at the Executive MBA Program. He also lectures at the Massachusetts Institute of Technology (MIT) and the Stern School of Business, New York University. He has published numerous articles and five books. In 2004, he founded a charity called ”Kids of Africa”, which has been home to more than 90 homeless children in Kampala on the shores of Lake Victoria since 2005 (www.kids-of-africa.com <http://www.sarasin.ch/internet/iech/index_iech/exit_ disclaimer.htm?ext_link=52619&ext_type=ext> ). For this project, Burkhard Varnholt was honored with the Swiss Re Civilian Services Prize.
Hans Stamm Partner Financial Services +41 58 249 34 98 email@example.com Dr. Robert Straw Director Head of Banking Strategy & Operations +41 58 249 42 76 firstname.lastname@example.org
Financial Industry in Crisis The industry's chance to regain its footing by Denise Chervet, General Secretary Swiss Bank Employees Association
Banks are in a crisis: even if their role in society is not fundamentally questionned, the way they do business has given rise to much criticism and many fears. The general public is putting the banking system under a microscope - be it in regard to the remuneration system, the processes within the banks or the products sold.
18 â€“ SWISS FINANCIAL SERVICES NEWSLETTER â€“ January 2013
Due to the pressure other countries exercise on Switzerland, even the much-defended Swiss banking secrecy is teetering on the brink. National legislators and supranational institutions (the OECD, the Bank for International Settlements, the Financial Stability Board) want to impose more stringent regulation and monitoring on the banks. In view of all these challenges, banks must rethink their business models. The fact that UBS considerably downsized its investment banking is impressive; however, it is not the only decision in regard to adapting its business model to today's market situation. All banks deem the impact of bilateral agreements and other regulations that will enter into force in the coming months or years to be significant and are aligning their strategy accordingly. In doing so, they abandon certain business segments or clients and collaborate more closely with other banks. In all this chaos one should not forget, however, that those most affected by these upheavals and changes are the average bank employees.
tage, namely high-quality services provided quickly, reliably and discretely. In order to weather the challenges coming up, banks must be able to count on their employees.
Bank employees are a competitive advantage to be preserved Bank employees are among the most loyal to be found in the Swiss economy. Their hallmarks include discretion, which they seem to have imbibed with their mother's milk and their nearly religious fervor when it comes to maintaining the banking secrecy. They were dedicated to this system and therefore helped keep up its stability. In return, they enjoyed some good employment conditions, often better than in other industries, and benefited from a certain amount of job security. They used to be well-respected members of society. However, the banking crisis had a very negative impact in their life. Not only are they exhorted to become always more productive, they also stand to lose their jobs. Moreover, the banking secrecy does not seem quite as irrevocable as it once did and bank employees now risk being prosecuted for things which were perfectly normal just a few months ago. As human resources became more globalized over the last few years, this increased the competition between the employees. This was to the detriment of conscientiousness and discretion, which previously had made up the core characteristics of such employees.
Ethical behavior can be promoted but it can also be hindered. Roberto Weber, a macro-economics professor at the University of Zurich, showed that generally, people are altruistic and have high moral standards.1 He also writes that greed and egotism are not specific to certain professions but rather to a certain environment which allows the super-seding of moral qualms.
All these new developments have brought with them uncertainty, all the more since employees feel that they are the losers in all of this happening. With the acquiescence of politicians, banks have given way to the tremendous pressure exerted by the US government and delivered documents with the names of their employees. New business strategies meant to cut costs are often implemented without wasting time on emotions and the much quoted ”symmetry of sacrifice” (meaning that both sides have to give up something) is ignored. Often, bank employees are hardly or not at all involved and badly informed of strategies being implemented. Of course, this is demotivating and can cause indifference, resignation, health problems or internal withdrawal. But banks with employees who are neither committed, likable nor correct (at all levels, from the doorman to the board’s members) will lose their most important competitive advan-
Encouraging correct behavior is a top level issue Too many bank managers have jeopardised the trust of their employees, which in turn encourages more risky behavior. Controlling employees at all times and in all circumstances is neither possible nor desirable, which is why it is important to mitigate risks by motivating a bank employees. This motivation does not stem from pursuing personal interests but rather from up-holding our society’s fundamental values. Banks should always consider ethical questions so that there is a sense of purpose to the work done and reasonable decisions are taken. Entrepreneurial thinking that would take into consideration the bank's long-term goals is not exactly fostered by preaching profit maximization in order to attain a higher bonus or improved yield on shares.
«Trusting social actors and employees might sound like the flavor of the month. However, really doing it could pay off handsomely!» If the consequences of a deed are uncertain or never confronted to them, moral standards are more easily thrown overboard. Such a situation ”authorizes” acting to the detriment of other people or one’s employer. An alternative would be to oblige employees to perform a risk analysis of the products sold in order to limit risky behavior. Moreover, when employees are included in the decision-taking process for products, corporate objectives or processes, they also assume more responsibility for the bank’s success at their individual level. Delegating responsibility helps water down an employee›s sense of responsibility and therefore encourages risky behavior. In order to avoid diluting sense of responsibility, as is often the case in large corporations, the line managers must be in control of the doings of their employees and assume responsibility for their actions. Often competition is another reason for losing a sense of responsibility. When employees compete with each other, their instinct of survival takes over, pushing aside moral concerns.
Roberto Weber: Warum ganz normale Menschen schlechte Dinge tun, NZZ, 19.9.2012.
Financial Industry in Crisis – The industry's chance to regain its footing
Trust is a better bet Many people feel that in the last few years, banks have been acting based on the short-term interests of some managers, thereby even acting against the interests of society at large. They thus not only provide a bad example but also provoke incomprehension and alienation on the side of the employees. Their commitment recedes and their risky behavior increases. However, line managers with sound ethical vawes contribute to the development of the responsable behaviour of employees. Corporate governance will also improve moral behavior by providing clear and appropriate rules which are then monitored for compliance. Employees must be able to understand and comply with these rules. This is why it is so important to include employees and to share information between the lower and the higher echelons. Employee representatives, staff councils and associations can improve the flow of information, provided they are given the time and the necessary resources. It is also a good idea to protect the members of staff councils against threats of dismissal. The best protection against risky behavior for a bank is to have employees who bear their share of responsibility, are able to contribute and help define company processes. This will also allow the bank to benefit from its employees› ideas, commitment and generosity.
Denise Chervet born on 25 April 1957 and lives in the Canton of Fribourg. Ms. Chervet holds a licentiate in social sciences from the University of Neuchatel, where she majored in social services and personnel services. She topped this up with an associates licentiate in Law from the University of Geneva. Ms. Chervet has been the managing director of the Swiss Banking Personnel Association since 1999. Before that she was engaged in social work and acted as Secretary to the Swiss National Youth Council for many years. Ms Chervet was responsible for supporting theater and youth literature during her stint with the Swiss Federal Office of Culture, where she worked from 1991 to 1993. From 1993 to 1999, Denise Chervet then worked as head of the Central Secretariat at Comedia, the Swiss trade union for the media. Ms. Chervet was a Deputy in the Cantonal Council of Fribourg for six years. Apart from that, she was also a board member at SUVA. Moreover, Ms. Chervet was a member of the foundation board of the pension fund Visiona from 2003 to 2008. She was a member of the cantonal mediation panel for cases of sexual discrimination.
CONCLUSION Opening up instead of closing up, providing transparency instead of promoting secretiveness and engaging in dialog instead ordering people around — these are the keys to a corporate culture based on trust and respect and which acts in the interest of employees, the bank and society. Trusting social actors and employees might sound like the flavor of the month. However, really doing it could pay off handsomely!
Denise Chervet General Secretary Swiss Bank Employees Association +41 0848 000 885 email@example.com
20 – SWISS FINANCIAL SERVICES NEWSLETTER – January 2013
A shift in corporate culture as a strategic success factor? by Michael Schneebeli
The modification of business models at banks and financial intermediaries is in full swing. There have been few days in the last twelve months where one did not read about mergers, acquisitions, cooperations, refocusing on core business, reducing the investment banking part of a bank, cost pressure or even closings. So where does this sudden pressure to change come from? It is interesting to observe that financial institutions that have focused on specific segments â€“ be they geographical or specific clients, and thereby on a specific range of products â€“ have generally fared better. Moreover, an institution's business model (centralization versus decentralization) as well as its financial strategy are decisive success factors. So what does all of this have to do with a financial institutionâ€™s corporate culture?
A shift in corporate culture as a strategic success factor?
Corporate culture as a guarantee for sustainable performance Corporate culture is made up of many aspects, such as communication, management systems, the influence of senior personalities, a company’s organization and processes, the strategies used as well as the recognition of performance when managing personnel, the so-called incentives. It would be too ambitious to cover all of these aspects in detail in this article. Experience shows that it is especially communication, organization and processes, strategies and incentives which are most important to inspire corporate success. Many regulations consider “tone at the top“ to be key to ensuring that regulatory intentions are indeed implemented and more specifically, lived as they should. Apart from the role model function of senior managers, of course a company should also have a sound communication so that strategy can be explained simply and understandably. From this, individual objectives can then be derived for each employee, which should set the right incentives. In simpler terms, companies must focus on enforcing a culture of compliance which requires an appropriate organization and relevant processes. In other words, this article will focus on corporate governance as a whole. Companies with a good corporate governance in place that includes checks and balances have an excellent basis for sustainable success. Corporate governance is considered to be the ideal instrument to manage and monitor this aspect. A significant aspect of building up a sustainable corporate culture as it is understood by regulators is the culture of complying which also allows checks and balances. Rather than playing Big Brother is watching you, this is much more about adhering to legal and ethical standards, which for one will be evident in behavior patterns but also in the company›s business activities being sustainable. A core requisite of the compliance culture is employees being encouraged to assume responsibility for their own actions. A cultural shift brought about by regulations Often a shift in corporate culture within a financial institution is driven by regulation, for instance due to more stringent rules on money laundering or for the customer relationship management of private clients (investor protection). Other aspects that inform this process are market needs and a shift in client behavior. Often, especially in the past but even today, financial institutions will try to implement new regulations as cost efficiently as possible, i.e. at the last possible moment before a law becomes effective. The reason for such behavior is that regulations are generally considered to be a threat and a hindrance to doing business. Most banks cannot imagine that shifts in culture brought about by regulations can be an opportunity. However, paradigms will have to shift in this respect if financial institutions wish to remain successful. A company's strategy simply cannot consist of waiting for the final version of a law in order to find out how to handle clients. Financial institutions should much rather focus on their core business and offer their clients the products they are looking for, provided these do not break local law.
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Swiss banks and financial institutions also affected by cultural shift Numerous studies organized by universities and consulting companies show that many financial institutions have not yet adjusted their strategies to deal with the new market environment. Missing or unclear strategies pose a problem to employees as it makes it impossible for them to undergo the necessary shift in culture. „What was true yesterday, is it still valid today, or only partially, or not at all anymore?” New crossborder rules, suitability aspects and other regulatory topics create great uncertainty for client advisors, especially for offshore banking. In addition, pricing has to undergo a radical change. Brokers' fees, deposit fees and kick-backs have become less and less acceptable to clients because it is not immediately obvious which service is being remunerated. As long as these aspects (i.e. the strategy and its implementation) remain fuzzy, there will be no change in the way that clients are being treated. Even worse, however, is the situation from a client perspective. These days, bank clients simply do not know what to expect next. So what does this withholding tax mean for a German client? What will be its consequences and its impact? How should a client advisor calm down a client who is insecure about the consequences and challenges he or she will have to face if the advisor is not sure either?
«A company’s strategy simply cannot consist of waiting for the final version of a law in order to find out how to handle clients.» A central aspect of the bank/client relationship is trust. If trust is broken, the client will quickly move on, thus draining the financial institution of one of its most important ”assets”. It is therefore critical for the success of a bank to rethink how it serves its clients or compensates its advisors, thus reducing the regulatory risks when attending to off-shore clients. This is why it is important not to delay changes any longer. These days, it is not necessary to be the very first to implement new rules but it is nevertheless important to be among the first third to have adopted a new rule. Otherwise, the current regulatory environment will force the institution to focus mainly on the risks rather than on its daily business. In the end, a financial institution will have to recognize that the best way to mitigate its reputational and legal risks is a shift in corporate culture (whether this be self-initiated or driven by regulatory changes). Of course, the clients will also have to be ready to accept these transformations when the bank becomes more transparent towards its various stakeholder groups, for instance when it implements a ”whitemoney” strategy. And finally, whilst adjusted processes
(including IT) will not be the only way to bring the transformation to fruition, they will nevertheless be a great aid to manage the regulations' complexity for client advisors and to mitigate the various risks. A shift in culture at financial institutions outside of Switzerland Unlike Switzerland, most other countries are little (or at least much less) affected by these tax issues. Moreover, there are many countries which dispose of far-reaching data protection laws where tax data may not be shared with other countries (as is the case in the USA). Apart from this, the protection of clients and creditors is also a central aspect of regulation, where the objective is to make banks once again responsible for their actions and to punish misbehavior accordingly. This of course brings about a curtailment in the freedom as to where business can be done in the future. A special focus is on bigger financial institutions. These are also grappling with the higher number of regulations and increasing requirements regarding capital, liquidity and a bank›s organization and structure in general. Here, the EU and the USA lead by example. Countries such as the United Arab Emirates, Singapore or Hong Kong still incorporate regulations at a slower pace. Therefore, each country has a different need to implement these new paradigms or to continue with their so-far successful company strategies. Shift in culture — what will the banking world look like in five years? A fundamental shift in paradigm will take a long time. Regulators of course would like to bring about this change as quickly as possible by pushing the Dodd Frank Act or the Volcker Rule or the strived-for segregation of retail from investment banking advanced by the Likannen Group, thus re-structuring financial markets and the relevant monitoring. Additional security measures are being worked out to make it easier to take future financial crises in stride, such as the so-called Recovery & Resolution Plan meant to protect tax payers from having to bail out banks in dire straights in the future. In my opinion, banks will have to drive this shift in culture themselves — regulations should in fact not be necessary. Banks must not only pay lip service to these new developments but truly change. The financial institutions which have not implemented any measures so far should start to proactively transform and adjust their business model and strategy to today›s circumstances in order to make their success sustainable. Missing this opportunity to change will bring about compliance costs, fines and maybe even further outflows of funds which will bring about an automatic realignment of the market. Remains the question whether one day the market will be made up of only large players who can take these costs in stride? The answer is yes — and no. In my opinion, institutes should sooner or later adjust to the new paradigm, regardless of their size. Otherwise, clients will start looking to entrust their funds to another institute as they (and presumably public opinion) will find that their current bank still has not understood the signs of the times. Arguments such as „we are too
small to appear on anyone's radar” are no longer acceptable. Such institutions talk the talk but are less rigorous when it comes to walking the walk! But as tempting as this strategy may seem, it can backfire very quickly. All that is needed is bad publicity, such as a legal case that has made it into the headlines and an institute›s existence may well be in jeopardy. Switzerland as a financial center has already undergone such experiences.
CONCLUSION It takes more than just a shift in paradigm, that is, from being an administrator to becoming a more proactive client advisor, for a bank to remain successful. Picking the right strategy, remaining persistent and rekindling clients› trust are central. However, if this has not been accompanied by a cultural shift, an institute›s halcyon days may well be numbered. Numerous banks and other financial institutions have already started implementing the new rules. The regulators are pushing for a quick transformation by placing corporate governance high on the agenda. So just how fundamental will this shift be in Switzerland? The process has already started. Topics such as withholding taxes for Germany, FATCA, cross-border activities and suitability will seriously impact the way clients are being attended to and will necessitate an adjustment of business models. A bank’s shift in paradigm will be critical as to whether the regulations can be implemented effectively and efficiently. Returning to a time with less regulation seems quite unrealistic. However, it is important that institutes do not wait for the final version of the regulations. Instead they should start familiarizing themselves with the new concepts, thus already preparing the terrain for the final version. Beginning tomorrow is too late. A bank should also not forget the uncertainty their clients are undergoing: they are the ones who are directly affected by these new circumstances, especially in regard to the taxation of their assets. In the future, a bank will have to focus on its clients' needs and provide compliant products and services, contrary to previously, where anything seemed possible. It is also questionable whether clients retain their trust in their banks. Was the client informed transparently, in an understandable manner and early on in regard to subjects of importance such as FATCA or the withholding tax for Germany? Or did the bank feel that this was just another regulation to be implemented while informing clients in a mass mailing after the fact?
Michael Schneebeli Partner Financial Services +41 58 249 41 06 firstname.lastname@example.org
Private Banking in Luxembourg A business under transformation by Alain Picquet, Partner, Head of Advisory KPMG Luxembourg
It is incredible to see how private banking has changed in such a short timeframe. During the last five years, private bankers were the envy of many other bank employees. Their day-to-day work mostly consisted of relationship management with limited time spent on technical matters. The collapse of Lehman Brothers completely changed this paradigm. Private bankers of today work in a more challenging climate, made up of a difficult economic environment, high market volatility, cost pressure, lower profit margins and regulatory changes. The situation would be acceptable, were it not be for private bankers having to face investors’ skepticism. Where in the past clients were listening to every word their adviser was telling them, today they raise questions. Restoring investor confidence has become critical for the industry. Last but not least, one of the main reasons that has lead to many foreign residents opening an account in Luxembourg in previous years has probably disappeared. The industry’s commitment is now clear: private bankers are no longer willing to open accounts for clients who are not transparent with their country of residence’s tax administration. We are shifting from an “off-shore” to an “on-shore” model. Faced with such a predicament, it has become harder to compete with the client’s “home-country bank”. You need to demonstrate very solid arguments for asking your client to visit you abroad. Private bankers now really need to proactively hunt for new prospects while remembering that the “farming mode” was the motto in previous years. On the one hand, private bankers in Geneva or in Zurich are facing the same challenges as their Luxembourg colleagues. On the other hand, there are differences between the two countries. When analyzing the importance of the industry in the respective countries, it becomes clear that the global Assets Under Management (“AUM”) in Switzerland are probably 8 to 10 times bigger than AUM in Luxembourg.
24 – SWISS FINANCIAL SERVICES NEWSLETTER – January 2013
Size matters. It gives rise to economies of scale, allowing private banks to invest strategically in all operational, IT and regulatory projects. This investment is likely to lead to increased profitability. It is therefore highly likely that smaller banks will undergo a consolidation process, similar to what we saw in Luxembourg during 2012. Some of the players could also decide to drop their banking license and pursue their business under an Asset Management regulated status (a so-called financial sector professional or “PSF”), using a third-party bank as their depositary bank.
«Many synergies could be developed between Luxembourg and Switzerland by producing ”cross border” country manuals for client relationship managers.» All Luxembourg private bankers will seriously have to monitor their costs and consider whether it is necessary to outsource some IT or operational parts of the business to a third party, a so-called “Support PSF”. The second major difference between Luxembourg and Swiss private banks is the origin of the clients: Luxembourg attracts more continental clients whereas Swiss banks’ clients are truly international. In both cases, bankers who want to grow their AUM will have to tailor their business development in order to target a very specific client segment in a limited number of key target countries. Furthermore, the CEOs of private banks are fully aware of the complexity of developing business relationships in other countries whilst still respecting the legal, tax and social environment of these countries. Many synergies could
be developed between Luxembourg and Switzerland by producing cross-border banking country manuals for client relationship managers. This snapshot of the situation in Luxembourg would not be complete without talking about what makes the private banking industry of this country specific. Luxembourg has developed a unique expertise in investment funds and has over the last 25 years become the second largest center in the world in terms of AUM (Note: after the U.S.) for domiciling investment funds. Luxembourg is by far the number one domicile (85% of the funds world-wide) used by the most important asset managers in the world (Note: including the Swiss asset managers) for cross-border fund distribution. All the technical expertise related to asset structuring and asset servicing that has been developed for large institutional clients can be re-directed to private banking. In a tax transparent world, the need to structure the global wealth of High Net Worth Individuals and in particular Ultra High Net Worth Individuals is becoming crucial. Luxembourgâ€™s private bankers can bring in the right financial engineering expertise to structure assets of such clients. We have all understood the message: there will be more challenges and complex situations in the future for the private banking industry. But in the end, this will create added value and a real interest in the profession.
Alain Picquet Partner Head of Advisory KPMG Luxembourg +352 22 51 51 7910 email@example.com
Designation of Tax Crimes as Money Laundering Predicate Offences Singapore takes a bold move – what about Switzerland? by Olivier Gauderon
The prevention of tax offences is undergoing various (foreseen) changes in regulation. The Monetary Authority of Singapore (MAS) has recently issued a consultation paper called “Designation of Tax Crimes as Money Laundering Predicate Offences in Singapore”1. This paper is the continuation of a series of steps taken by Singapore to “safeguard its financial system from being used to harbor proceeds from tax crimes”. As the consultation is ongoing until 9 December 2012, it is too early to draw final conclusions; however, the consultation paper is informative for Switzerland which is currently in the process of reflecting on its future as a financial marketplace. What will be the impact on the banks in Switzerland?
Consultation paper, P019 - 2012 October 2012 available on http://www.mas.gov.sg
26 – SWISS FINANCIAL SERVICES NEWSLETTER – January 2013
Designation of Tax Crimes as Money Laundering Predicate Offences – Singapore takes a bold move – what about Switzerland ?
A snapshot of the MAS consultation paper Following the revised FATF recommendations to mitigate new and aggravated threats, MAS has defined which tax crimes or offenses constitute a predicate of money laundering. As such, the second appendix of the Corruption, Drug trafficking and other Serious crimes Act (“CDSA”) will be updated by June 2013 to include these offenses and criminalize the laundering of proceeds as of 1 July 2013. This clearly adds a burden on bankers’ daily work as banks have to “build a robust and effective regime to combat the laundering of proceeds from serious tax offences”. What exactly is meant by this general statement? Firstly, the whole industry has to agree on a clear definition of tax crimes. Definitions are provided in the appendix of the consultation paper and can be summarized as follows: Direct tax offences under Income Tax Act
Indirect tax offenses covered in the Goods and Services Tax Act
s.96 Tax Evasion
s.62 Tax Evasion
s. 96A Serious fraudulent Tax Evasion
s.63 Improperly obtained refunds
These regroup a series of behaviors, including the omission of declaring income, producing false statements, providing false information (orally or in writing) to questions asked in provision with the Tax Act, maintaining, authorizing or helping to maintain false books of accounts or other records as well as assisting any other person in so doing (for a full list please refer to the appendix of the consultation paper). The MAS took into account comparable tax offenses designated in other major jurisdictions when setting these definitions for effective deterrence. Moreover, each institution has to enhance its internal control framework in order to comply with this new regulation, as it would not be possible for MAS to define a one-size-fits-all approach. This includes defining appropriate governance, internal policies, training of employees, controls and procedures that effectively detect and deter the laundering of proceeds from willful or fraudulent tax evasion through the financial system. In particular, financial institutions have to (a) identify and assess tax-related risks and (b) manage and mitigate tax-related risks. In doing so, it is expected that financial institutions will supplement existing due diligence measures with additional documents to be obtained from the client and additional checks and controls, including red-flag indicators to identify higher risk clients. For higher risk clients, it is expected to conduct enhanced due diligence and if needed to file suspicious transactions records. Challenges for the implementation of such regulation Clearly, the burden lies on the bank’s side, which has to implement a proper organization to identify, track and file reports on suspicious client’s tax offences. Is this all clear and simple? Certainly not. Unlike money-laundering prevention where certain behaviors, patterns and red flags exist, almost
28 – SWISS FINANCIAL SERVICES NEWSLETTER – January 2013
«The challenge of tax compliance control, is the absence of standardized tax rules across jurisdictions and the lack of commonly accepted controls.» in an industry standard form, much still needs to be defined in tax compliance. This challenge has been recognized by the Singapore Private Banking Industry Group which is working to develop a sound set of industry practices that will provide a conceptual framework for the implementation of this new requirement. This document, being under preparation, has not yet been made available to the public. In the absence of such guidance or industry standards, we can try to assume the challenges regarding the definition and implementation of an efficient prevention and tracking system as follows: • Obtaining a client’s confirmation on his tax situation: Such a confirmation is a helpful document at the time of the account opening and allows bankers to rely on initial information from the client. The big question related to the client confirmation is how often the banker has to update it and whether it is sufficient? Under the current consultation paper, it is likely that the confirmation alone will not be considered to be sufficient over time to „demonstrate understanding of the client’s tax risk profile and applying monitoring tools”. • Client tax profile: Similar to the “know your customer” documents a bank establishes, a client tax profile could be requested for each client. Such a profile would provide an overview of a client’s tax situation, where and under which regime he pays taxes as well as any particular tax-related items. This document would be established by the bank based on information received by the client and where necessary, verified by the bank. This is conceptually easy to understand, however bankers will have to be capable of understanding and assessing the quality and consistency of information provided by the client, and therefore will have to gain extensive tax knowledge covering the various countries the bank serves clients in. Also, it may be difficult to verify information and assertions made by the client. • Monitoring: In addition to the above documentary evidences, banks will have to define red-flag indicators and parameters for the bank to conduct its risk assessment and identify higher risk clients. Such measures could include a closer look at the products used (the use of non-tax-efficient products may turn out to be suspicious), structures implemented for holding assets, using hold mail or numeric accounts, bearer shares vehicles, etc.
Designation of Tax Crimes as Money Laundering Predicate Offences – Singapore takes a bold move – what about Switzerland ?
Switzerland – what solutions do we have? Is Switzerland likely to adopt a similar position to follow international rules and practice? Tax conformity seems to be increasingly important for the acceptance of Switzerland as a financial center of the future… and FATF recommendations have to be followed by Switzerland as well. The question really is one of definition: should all tax offences be dealt with in the same way or should strict rules be applied to severe tax offences, which then fall under anti-money laundering rules and trigger the anti-money laundering mechanisms, while others can be dealt with self-regulation and client declarations? The State Secretariat for International Financial Matters – SIF2 has clearly indicated the importance of „…Switzerland having no desire to oppose initiatives in this sphere (close cooperation in the fight against tax offences), and is continuing to implement the OECD standard for provision of administrative assistance.” This position is based on the Swiss Federal Council’s strategy on white money (Weissgeldstrategie3) and is translated into 3 components:
Financial integrity strategy Internat. admin. assistance
OECD standard in double taxation agreements
Regularisation of past, anonymous taxation of income
Measures against money laundering and dictator’s assets
Besides concluding withholding tax agreements with selected countries and improving international administrative assistance, the white-money strategy foresees financial integrity measures and enhanced diligence duties. The current Swiss finish in this area casts a significant risk on the international competitiveness of Switzerland as it will be hard to implement in practice. Is a Swiss way still possible or have we missed the boat already? One alternative to the proposed components which so far has not been discussed much is the possibility of abolishing or reducing the client’s right to take part in the proceedings in case of international administrative assistance. This is a solution unique to Switzerland which hinders proper collaboration with the local authorities and continues to block Switzerland in its international administrative assistance efforts. Although the right for an investigated person to be informed and allowing them to defend themselves is a fundamental principle in Switzerland, a softening of certain rules or finding
a way to improve the efficiency of such proceedings may be an asset in the current negociations. Looking into this aspect may provide alternative means of complying with the international spirit and helping Switzerland appear to be more collaborative than what current legislation allows. This may also preserve some of the Switzerland’s strengths and attractiveness as a financial center and as such, is a topic worth discussing. From an economical point of view, we should strive to find the most efficient system to track and prevent severe tax offenses. In that conjunction, we should ask whether the banker is the right person for this job? By asking banks to implement measures to monitor and control those clients comply with tax requirements, banks would have to go beyond their core competence and expertise and develop new skills. It would also force bankers into a position where they have to handle clients’ personal tax situations, which is not part of the traditional banking business and has proven to be an area not necessarily suitable for banks to mix in.
CONCLUSION This topic is a complex and sensitive subject for Switzerland›s financial market competitiveness. Swiss authorities are currently investigating this topic intensively, with potential changes to the penal tax law and antimoney laundering code. In parallel, the swiss bankers association is developing thoughts on how to self-regulate this area, while the banking regulator also develops its own views on the question. Given the complexity of the matter and the interactions with other burning topics (such as Switzerland›s white money strategy, international cooperation or other negotiations with the European community to name only a few) it is of utmost importance that all parties to the process open the dialogue and coordinate their efforts. Switzerland›s interest should definitely come first, before special interest groups or political interests of certain parties - let›s hope the swiss tradition of open dialogue and good compromise is followed in this matter.
Olivier Gauderon Partner Financial Services +41 22 704 17 14 firstname.lastname@example.org
Report on international financial and tax matters 2012, SIF – State Secretariat for International Financial Matters Weissgeldstrategie: Swiss Federal Council publication dated 22 January 2012
30 – SWISS FINANCIAL SERVICES NEWSLETTER – January 2013
Little Consolidation Activity in Swiss Private Banking Tempestuous times, with no silver lining in sight! by Christian Hintermann / Philipp Arnet
Little Consolidation Activity in Swiss Private Banking – Tempestuous times, with no silver lining in sight
Swiss private banks have been experiencing the perfect storm for more than five years already. Apart from the macroeconomic uncertainties caused by the breakdown of the financial markets and the ensuing debt crisis, the international political establishment is busy pursuing tax evaders putting even more pressure on Switzerland to completely abolish banking secrecy. While the ratified double-taxation treaties respect the anonymity sought after by banking clients, the extraterritorial demands from the Internal Revenue Service with its FATCA have caused the full abandonment of the concept of privacy for US citizens by Swiss banks. Consumer protection regulations relating to financial services are also increasing, as demonstrated by the EU’s MiFID Guidelines I and II and Switzerland’s Financial Services Act, which will be the next big challenge for Swiss banks in regards to their operations and strategy.
Graph 1: Number of Swiss banks focussing on private banking
Adjusting to and implementing the new regulations will increase costs for private banks in a period characterized by low interest rates and client caution towards securities trading. This is why it should not come as a surprise to find Swiss private banks’ profitability eroding. Smaller banks in particular face decreasing incomes and increasing fixed costs. According to the KPMG Private Banking database, which contains financial data on 120 Swiss private banks, the average costs of banks with less than CHF 5bn of assets under management in 2011 were at the same level of 2007 whilst income had fallen by about 35% over the same period. Nearly a quarter of all private banks in the database experienced operating losses during 2011. It was only due to extraordinary income (primarily from the release of reserves) that these banks could show positive bottom-line results for the year. Apart from having to deal with cost management, which so far had little relevance in the private banking sector, market participants are especially experiencing challenges in regard to strategy. They are being forced to adjust their business models to this reality and look for new growth potential through focus and differentiation.
Some of the decline was due to mergers and acquisitions. In the last few years, 3 to 7 private banks were sold in Switzerland (see graph 2). Swiss subsidiaries of foreign banks were especially targeted. These subsidiaries were sold mainly due to increased political or financial pressure on their respective parent companies as well as the absence of growth perspectives. Apart from mergers and acquisitions, the liquidation of certain private banks contributed to the decrease number. Very few new Swiss private banks were founded over the last two years.
32 – SWISS FINANCIAL SERVICES NEWSLETTER – January 2013
160 155 150 145 2006
Source: KPMG Analysis
Graph 2: M&A transactions with Swiss private banks as target 8 7 Number of transactions
Modest Tendencies to Consolidate In view of this background, it is rather surprising that the widely expected consolidation has not yet taken place for Swiss private banks in 2012. There is some evidence, however, that consolidation is happening as the number of private banks has decreased constantly over the last few years. In 2005 there were 181 banks primarily active in private banking; today, the number has dropped to 160 (see graph 1).
6 5 4
Source: KPMG Analysis
1 2011 Foreign sellers
Possible Reasons for Low Consolidation Activity There are various possible reasons for the absence of waves in Swiss private banking consolidation: • Few attractive take-over targets Potential buyers are scared off by the complex regulatory, tax and legal situation. Further, these circumstances make the sales process long-winded and complex. • Discrepancy between supply and demand Many interested buyers are looking for client portfolios that are well-focused and simply structured. However, most client portfolios for sale are widely diversified and, very often, in complex structures. • Few well-positioned buyers Some smaller private banks are of the opinion that offense is the best form of defense which is why they are positioning themselves as buyers. However, the absence of the necessary means and a clear strategy make their offensive efforts difficult. To add to this, many buyers who would have previously come from Europe or the United States have withdrawn from the Swiss market and buyers from certain emerging markets often do not meet the standards required by FINMA. • Going it alone is painful The great uncertainty as well as the speed at which developments are coming in are blocking decisions. When is the right moment to sell the bank? Many bank owners are ready to sit out this crunch, taking in stride the outflow of client funds and suffering operating losses. Such banks thus become increasingly harder to sell. It is therefore clear that going it alone with neither a clear growth strategy nor growth possibilities and surviving only due to cost reduction will not be a very successful venture. • Sales processes have become more complex Selling a private bank during the boom years was an easy undertaking. We found that many sales in those days were inadequately prepared and conducted. These days, private banks can only be sold if the sales process very well prepared and full transparency is ensured. On the buy side, buyers often lack flexibility regarding the structure and the scope of the transaction.
The Pressure to Adjust Remains Despite the fact that regulatory change is continuing, the picture is becoming increasingly clear. In 2013 private banks will be able to determine the impact of these regulations much better. The 2012 results for most private banks will be mainly consistent with 2011, i.e. many private banks will continue to incur losses. As the economic and political uncertainties across Europe and globally continue, it is not expected that investors will become more active. Smaller private banks which do not have a clear niche strategy and potential to grow may well have to exit from the market. Foreign banks may have to ask themselves whether their Swiss subsidiaries are indeed as relevant to their strategy as they originally thought. They will either need to sell their subsidiaries in order to reduce complexity and risks or expand their activities if they are indeed a part of their core competences. Larger institutions will keep their eyes open for promising take-over targets in Switzerland with select and strategic core markets. However, growth will be an issue for many market participants. The structural realignment in the Swiss private banking sector will not only be driven by classical M&A activities but also by further liquidations and the sale of client portfolios originating from specific countries. It remains to be seen whether there will actually be a real market for the latter but, if yes, banks could start focusing on certain core geographical markets. Successful examples have shown that this is indeed possible. There is only one certainty: there is no easy workaround to the current challenges.
Christian Hintermann Partner Financial Services +41 58 249 29 83 email@example.com Philipp Arnet Partner, M&A Financial Services +41 58 249 41 81 firstname.lastname@example.org
Numerous take-over discussions that had been started over the past two years have come to naught. Various private banks have been up for sale for years without any takers. This evidences a marked shift in M&A for the private banking sector. Some years ago, it was a pure sellers’ market: any private bank that was put up for sale had dozens of interested buyers. These days if sellers wish to close a deal, they must manage the sales process in a much more decisive way and design it to be more flexible. To date we have witnessed this in only the fewest of cases.
Pinboard KPMG regularly offers updates on topics and trends that regard the financial services sector. Find more information at kpmg.ch /financialservices Surveying the market: Are you ready for FATCA? December 2012 With the industry facing so many uncertainties, KPMG firms' FATCA professionals conducted a global survey of global and regional banks, insurance companies and various other financial institutions to assess participants' awareness, attitudes and actions regarding FATCA. What steps have they taken thus far and where do the key challenges lie?
Performance of Swiss private banks in 2012 An industry in transition, December 2012 Swiss private banks have been the focal point of discussions and editorials for some time now. This survey of private banks looks at the financial developments in this industry since the beginning of the global financial crisis and shows possible strategies available to these banks. Last boarding call Overview of the alternative industry’s preparedness for AIFMD, December 2012
Frontiers in Finance Cost Optimization: Better data, efficient processes and lower costs, December 2012 The global economy continues to distress the financial services sector. Which developments are currently affecting the markets in the United States, China and Europe? Frontiers' December issue addresses cost optimization, the transformation of businesses and operating models and the challenge of liquidity, among others. Frontiers in Tax People thinking beyond borders in financial services, December 2012
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The December issue of Frontiers in Tax focuses on recent developments in fiscal policy that are putting great pressure on companies in the financial services sector. What should be key considerations in order to prevail in this challenging market environment?
34 – SWISS FINANCIAL SERVICES NEWSLETTER – January 2013
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Contacts Daniel Senn Partner, Head of Financial Services Member of the Executive Board +41 58 249 34 05 email@example.com
Philipp Rickert Partner Financial Services +41 58 249 42 13 firstname.lastname@example.org
Philipp Arnet Partner, M&A Financial Services +41 58 249 41 81 email@example.com
Michael Schneebeli Partner Financial Services +41 58 249 41 06 firstname.lastname@example.org
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Mirko Liberto Partner Financial Services +41 58 249 40 73 email@example.com
Markus Wiesmann Manager Financial Services +41 58 249 41 26 firstname.lastname@example.org
Alain Picquet Partner Advisory, KPMG Luxembourg +35 222 5151 79 10 email@example.com
Published by – KPMG AG Editor – KPMG AG, Badenerstrasse 172, Postfach, CH-8026 Zurich Telephone +41 58 249 20 01, Fax +41 58 249 44 06, Email: firstname.lastname@example.org Editorial team – Hans Stamm, Partner, Financial Services, Markus Wiesmann, Manager Financial Services – Bettina Neresheimer, Marketing Manager Financial Services, Andrea Schneiter, Marketing Coordinator Financial Services Design – Elena Strano, Florence Print – Heer Druck, Sulgen Articles may only be republished by written permission of the editorial team and quoting the source: KPMGs Swiss Financial Services Newsletter. Swiss Financial Services Newsletter is published three times a year in German and English.
If you have any feedback on this issue or would like to order further copies, please e-mail us at email@example.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2013 KPMG Holding AG/SA, a Swiss corporation, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. Printed in Switzerland. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Published on Jan 21, 2013
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