Go Back   English Forum Switzerland > Living in Switzerland > Swiss politics/news  
Reply
 
Thread Tools Display Modes
  #281  
Old 04.10.2008, 13:53
JVC
 
Posts: n/a
Re: How Safe is UBS

Quote:
View Post
Makes you wonder what the Brits know that the Irish don't!
This article from yesterday may explain it:

Quote:
Building societies have demanded "urgent" action by the Government to restore a "level playing field" in the savings market after Ireland guaranteed the deposits of six national lenders.
Reply With Quote
  #282  
Old 04.10.2008, 14:20
AbFab's Avatar
Forum Legend
 
Join Date: Sep 2006
Location: Zürich
Posts: 8,229
Groaned at 347 Times in 237 Posts
Thanked 11,997 Times in 4,116 Posts
AbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond reputeAbFab has a reputation beyond repute
Re: How Safe is UBS

Quote:
View Post
This article from yesterday may explain it:
I think Nev's point was what does the British government know that caused it to limit the guarantee to £50,000...
Reply With Quote
The following 2 users would like to thank AbFab for this useful post:
  #283  
Old 04.10.2008, 18:04
Nev
 
Posts: n/a
Re: How Safe is UBS

Quote:
View Post
I think Nev's point was what does the British government know that caused it to limit the guarantee to £50,000...
Correct Abfab. What's more with Irish Deposit insurance theoretically infinity and UK deposit insurance now at GPB 50,000, the depositors in Switzerland seem to be getting cheated with their GBP 15,000 (CHF 30,000) backstop. Even the US, at the eye of this storm, guarantees deposits up to almost 10 times the Swiss level of protection. In fact I believe the Swiss deposit protection is practically the lowest in Europe. So either the SNB thinks Swiss banks are so safe that deposits don't need a realistic guarantee or maybe the Swiss government knows something we all don't! Conspiracy theory or what?
Reply With Quote
  #284  
Old 04.10.2008, 18:26
Nev
 
Posts: n/a
Re: How Safe is UBS

Quote:
View Post
Switzerland is a small country with a small economy. It’s safe haven rests not on its size but it’s stability and low inflation. The assets of two big Swiss banks account for six times Switzerland’s GDP. If the Swiss banking system collapsed there would be a rush to get out, not in, which would put enormous pressure on the Franc. I'm not an FX expert but that's how I see it. Maybe someone else can add some other perspective.
Just as an aside on this, I was reading the weekend FT on the train up to Zurich this morning (as you do!) and I came across an article on Iceland. As you may have read, Iceland was forced to nationalize it's fourth largest bank in a bail out last week which brought the whole banking industry in that country under scrutiny and the market didn't like what it saw. No wonder, the assets of Iceland's banks amount to 10 times Iceland's GDP so a bail out on a big scale would be impossible as the economy couldn't support it. The Icelandic Kroner fell 27% against the dollar as a result. As the FT says, the major economic activity of Iceland outside the financial sector was cod fishing and we know what's happened to the supply of North Atlantic cod.
Now I'm not saying Iceland, with a population of just over 300,000, is directly comparable to Switzerland. For a start Switzerland doesn't sit on top of the one of the biggest fissures in the world's crust. For that reason alone I'd be short the Kroner. And Switzerland can also fall back on it's cheese, chocolate and cuckoo clock makers to keep the economy ticking over if the banking sector did collapse. But since Switzerland's banking sector accounts for a whopping 6 times GDP, what happened to the Icelandic Kroner kind of hints what would be in store for the franc if there was a major banking collapse here.

Last edited by Nev; 05.10.2008 at 09:11.
Reply With Quote
  #285  
Old 04.10.2008, 18:27
irinastaxen's Avatar
Senior Member
 
Join Date: Jun 2008
Location: Vevey
Posts: 299
Groaned at 6 Times in 2 Posts
Thanked 166 Times in 92 Posts
irinastaxen is considered knowledgeableirinastaxen is considered knowledgeableirinastaxen is considered knowledgeable
Re: How Safe is UBS

Quote:
View Post
Correct Abfab. What's more with Irish Deposit insurance theoretically infinity and UK deposit insurance now at GPB 50,000, the depositors in Switzerland seem to be getting cheated with their GBP 15,000 (CHF 30,000) backstop. Even the US, at the eye of this storm, guarantees deposits up to almost 10 times the Swiss level of protection. In fact I believe the Swiss deposit protection is practically the lowest in Europe. So either the SNB thinks Swiss banks are so safe that deposits don't need a realistic guarantee or maybe the Swiss government knows something we all don't! Conspiracy theory or what?
This might be a stupid question, but the 30'000 is it <<clean>> cash on current accounts or does it include things like UBS <<fondskonto>> , <<termingeldskonto>> etc ?
Reply With Quote
  #286  
Old 05.10.2008, 09:23
Nev
 
Posts: n/a
Re: How Safe is UBS

Quote:
View Post
...but it doesn't mean that an Irish bank won't fail although the guarantee will help them recapitalise.
On the question of the Irish government guarantee there was a good point in an article I read in the Telegraph yesterday which pointed out that having a government guarantee isn't fail-safe. It pointed out that a few Latin American countries defaulted on their debt when they over extended themselves and couldn't meet their obligations - so let's hope the Irish Government isn't called on to honour it's guarantees, or, as the article says, you might need the "luck of the Irish" to get your money back.
Reply With Quote
  #287  
Old 05.10.2008, 13:30
Goldtop's Avatar
Forum Legend
 
Join Date: Feb 2008
Location: Zurich
Posts: 2,847
Groaned at 11 Times in 11 Posts
Thanked 905 Times in 625 Posts
Goldtop has a reputation beyond reputeGoldtop has a reputation beyond reputeGoldtop has a reputation beyond reputeGoldtop has a reputation beyond repute
Re: How Safe is UBS

Quote:
View Post
Correct Abfab. What's more with Irish Deposit insurance theoretically infinity and UK deposit insurance now at GPB 50,000, the depositors in Switzerland seem to be getting cheated with their GBP 15,000 (CHF 30,000) backstop. Even the US, at the eye of this storm, guarantees deposits up to almost 10 times the Swiss level of protection. In fact I believe the Swiss deposit protection is practically the lowest in Europe. So either the SNB thinks Swiss banks are so safe that deposits don't need a realistic guarantee or maybe the Swiss government knows something we all don't! Conspiracy theory or what?
The Swiss Government is not guaranteeing anything! Banks operating in Switzerland contribute to an insurance pool which is capitalized at CHF 4 billion. That pool would pay max CHF 30k per customer. If a big bank goes down, then the 4B may not even cover the 30k.

Those who fear the worst should put their money in PostFinance. The Swiss Government owns PostF and implicitly guarantees all accounts. PostF ist not a Bank, only does retail, and does not dabble in exotic instruments.

AAA rated Zurich-KB is good too because of the Cantonal guarantee.
Reply With Quote
  #288  
Old 05.10.2008, 13:36
Goldtop's Avatar
Forum Legend
 
Join Date: Feb 2008
Location: Zurich
Posts: 2,847
Groaned at 11 Times in 11 Posts
Thanked 905 Times in 625 Posts
Goldtop has a reputation beyond reputeGoldtop has a reputation beyond reputeGoldtop has a reputation beyond reputeGoldtop has a reputation beyond repute
Re: How Safe is UBS

Quote:
View Post
This might be a stupid question, but the 30'000 is it <<clean>> cash on current accounts or does it include things like UBS <<fondskonto>> , <<termingeldskonto>> etc ?
Bank insolvencies do not fully affect Fondskonti. Those are separate legal entities holding assets, e.g. stocks, bonds, etc.

Termingeld can be a fiduciary deposit. That is as good as the borrowing counterpart. So you should ascertain that it is not a Lehman-like or Icelandic counter-party. are not directly involved in
Reply With Quote
This user would like to thank Goldtop for this useful post:
  #289  
Old 05.10.2008, 14:20
JVC
 
Posts: n/a
Re: How Safe is UBS

Quote:
View Post
The Swiss Government is not guaranteeing anything! Banks operating in Switzerland contribute to an insurance pool which is capitalized at CHF 4 billion. That pool would pay max CHF 30k per customer. If a big bank goes down, then the 4B may not even cover the 30k.
Going back to the first Telegraph article I quoted:

Quote:
The increased limit should cover 98 per cent of all bank customers.

However, research by leading investment bank Credit Suisse shows that though just 2 per cent of customers are not covered, these customers hold close to half of the entire savings in Britain.

"At least 40 per cent of deposits are over £50,000 by value," said Jonathan Pierce at the bank.

This means that at least 40 per cent of £1.17 trillion worth of British savings and deposits – £468 billion – are not covered by the new British guarantee.

"In other words, we believe much of the debate around the deposit guarantee scheme is somewhat irrelevant. The bare statistics demonstrate that modestly adjusting the compensation limit will do very little. If the aim is to sufficiently bolster confidence, we think the cap needs to be increased very markedly indeed or removed altogether via a blanket guarantee," added Mr Pierce.
(I think the dodgy maths in the middle are the reporter's)

Moving on from that, I have just been trying to find out when the current 35,000 limit for the UK came in and came across this article, dated 31 January 2008:

Quote:
What's new?

Chancellor Alistair Darling seems happy keeping the current £35,000 limit - the Tories want it raised to £50,000. But, Darling is consulting on whether banks should make up-front contributions to a fund to repay savers if a bank fails. At the moment, banks pay into a fund after the event.

But that's good

Banks say a prepaid scheme will mean a 'very hefty' bill for the industry. So it might not be such good news for bank customers because lenders are already threatening to pass on the additional costs through sharp rises to mortgage costs and lower deposit rates.
WTF??? Someone please tell me that that article has gone the wrong end of the stick.
Reply With Quote
  #290  
Old 05.10.2008, 18:55
Nev
 
Posts: n/a
Re: How Safe is UBS

Wow..now the German state is guaranteeing deposits with its banks to infinity. That's upped the stakes in Euroland. Kind of "my country's guarantee is worth more than your country's guarantee" Is there a ticking time bomb in Europe? C'mon Switzerland. Money doesn't need a passport to cross borders!
Reply With Quote
  #291  
Old 05.10.2008, 19:09
Uncle GroOve's Avatar
Forum Veteran
 
Join Date: Feb 2008
Location: Mendrisio
Posts: 1,082
Groaned at 7 Times in 5 Posts
Thanked 733 Times in 382 Posts
Uncle GroOve has a reputation beyond reputeUncle GroOve has a reputation beyond reputeUncle GroOve has a reputation beyond reputeUncle GroOve has a reputation beyond repute
Re: How Safe is UBS

They are addressing the primal fear of Herr and Frau Muster, Le Blanche, Bianchi and Smith. IF (big if) millions of ordinary folks can be somehow convinced not to run on their respective banks, then, eventually, the emotional side of the problem will have been resolved. But that alone.

If the ordinary folks panic there's just no way you could manage the situation, except maybe by calling for martial law :-/ Ugly prospect indeed.

Paul
Reply With Quote
  #292  
Old 05.10.2008, 22:51
Member
 
Join Date: Oct 2007
Location: Zurich
Posts: 148
Groaned at 9 Times in 5 Posts
Thanked 18 Times in 11 Posts
Edwina has made some interesting contributions
Re: How Safe is UBS

Quote:
View Post
The ZKB is AAA rated. There are only very few banks, anywhere in the world, with that very high rating. Moreover, because the ZKB is state-owned, they do not indulge in reckless and speculative transactions. And there is no sign of a housing price bubble in Zurich, which might impact the ZKB.

If you live in ZH, then you are part-owner of the ZKB. The profits are distributed to the ZH communes and helps infrastructure projects. So for patriotic, pecuniary and safety reasons, there is no better choice.

Declaration of vested interest: I reside in Zurich and am a beneficiary of ZKB prosperity.
I agree with you. I changed from UBS to ZKB. Feel a whole lot better now.
Reply With Quote
  #293  
Old 06.10.2008, 07:57
Goldtop's Avatar
Forum Legend
 
Join Date: Feb 2008
Location: Zurich
Posts: 2,847
Groaned at 11 Times in 11 Posts
Thanked 905 Times in 625 Posts
Goldtop has a reputation beyond reputeGoldtop has a reputation beyond reputeGoldtop has a reputation beyond reputeGoldtop has a reputation beyond repute
Re: How Safe is UBS

Quote:
View Post
Wow..now the German state is guaranteeing deposits with its banks to infinity. That's upped the stakes in Euroland. Kind of "my country's guarantee is worth more than your country's guarantee" Is there a ticking time bomb in Europe? C'mon Switzerland. Money doesn't need a passport to cross borders!
No need to run across the border. Move your money to 100% owned Swiss Government's PostFinance for a 100% national guarantee. Or to AAA rated ZKB for a 100% cantonal guarantee.

Another good reason: When PostFinance makes profits, then every resident in Switzerland benefits. When ZKB makes profits, then every ZH resident benefits. When UBS makes profits, then the big beneficiaries are the State of Singapore and unnamed Sheiks. So why should the Swiss Government, i.e. we the residents of Switzerland underwrite foreign potentates?
Reply With Quote
This user would like to thank Goldtop for this useful post:
  #294  
Old 06.10.2008, 09:00
Forum Legend
 
Join Date: Jan 2007
Location: Geneva
Posts: 5,521
Groaned at 123 Times in 108 Posts
Thanked 3,297 Times in 1,737 Posts
Shorrick Mk2 has a reputation beyond reputeShorrick Mk2 has a reputation beyond reputeShorrick Mk2 has a reputation beyond reputeShorrick Mk2 has a reputation beyond reputeShorrick Mk2 has a reputation beyond reputeShorrick Mk2 has a reputation beyond repute
Re: How Safe is UBS

Quote:
View Post
Or to AAA rated ZKB for a 100% cantonal guarantee.
I hear Glintnir is 100% government-guaranteed as well
Reply With Quote
  #295  
Old 06.10.2008, 09:07
Nev
 
Posts: n/a
Re: How Safe is UBS

Quote:
View Post
Another good reason: When PostFinance makes profits, then every resident in Switzerland benefits. When ZKB makes profits, then every ZH resident benefits. When UBS makes profits, then the big beneficiaries are the State of Singapore and unnamed Sheiks. So why should the Swiss Government, i.e. we the residents of Switzerland underwrite foreign potentates?
Given the decline in the value of their investment in UBS, as far as I can see it's the foreign potentates who've been doing the underwriting. Moreover aren't you missing the amount of taxes UBS pays to the Swiss government, the amount of employment it provides to Swiss residents and it's contribution to the overall economy. If you would prefer the Swiss economy to function solely on domestic capital investment and deposits then the country will be a very different place from what it is now. For a start the collapse the banking sector would have a devastating impact on the economic health of Kanton Zurich which would undermine the strength of the guarantee you're putting so much faith in. All these guarantees are fine until they are called upon to be met. If ever they are, and i think that's unlikely, it would wreck the public finances of the countries or kantons involved at a time when the very thing that precipitated that event - a bank collapse - would decimate the economies of those guarantors. If there's one thing we've learnt over the last two weeks it's that governments are not going to let banks default to depositors. Whether that's by express guarantee now, or bail out later, the debate about too big to fail is over. Switzerland, in particular could not afford the consequences of a bank collapse. But anyone who can't sleep at night should absolutely switch their money with Postfinance or ZKB if it makes them sleep better.

Last edited by Nev; 06.10.2008 at 10:45.
Reply With Quote
This user would like to thank for this useful post:
  #296  
Old 06.10.2008, 11:44
magyir's Avatar
Forum Veteran
 
Join Date: Oct 2006
Location: Wallisellen
Posts: 1,627
Groaned at 7 Times in 7 Posts
Thanked 501 Times in 346 Posts
magyir has a reputation beyond reputemagyir has a reputation beyond reputemagyir has a reputation beyond reputemagyir has a reputation beyond repute
Re: How Safe is UBS

Quote:
View Post
The Swiss Government is not guaranteeing anything! Banks operating in Switzerland contribute to an insurance pool which is capitalized at CHF 4 billion. That pool would pay max CHF 30k per customer. If a big bank goes down, then the 4B may not even cover the 30k.

Those who fear the worst should put their money in PostFinance. The Swiss Government owns PostF and implicitly guarantees all accounts. PostF ist not a Bank, only does retail, and does not dabble in exotic instruments.

AAA rated Zurich-KB is good too because of the Cantonal guarantee.
4B/8 Mio = 500 CHF per person in CH....great! Seems like peanuts after the Billions being thrown around elsewhere. The bottom line here is that the current "arrangements" (self-regulating) are inadequate.
Reply With Quote
  #297  
Old 06.10.2008, 11:48
magyir's Avatar
Forum Veteran
 
Join Date: Oct 2006
Location: Wallisellen
Posts: 1,627
Groaned at 7 Times in 7 Posts
Thanked 501 Times in 346 Posts
magyir has a reputation beyond reputemagyir has a reputation beyond reputemagyir has a reputation beyond reputemagyir has a reputation beyond repute
Re: How Safe is UBS

Quote:
View Post
Really? Despite the financial calamities and deficits in the US, the US$ is gaining value. Why would insolvency of some Swiss banks devalue the currency?
Yes but as the dollar soars this reflects a drop in Treasury note returns right? As everyone piles into them for security the yields drop. (Of course this helps with the odd 700 Bio bill + 110 Bio pork).
Reply With Quote
  #298  
Old 06.10.2008, 11:53
magyir's Avatar
Forum Veteran
 
Join Date: Oct 2006
Location: Wallisellen
Posts: 1,627
Groaned at 7 Times in 7 Posts
Thanked 501 Times in 346 Posts
magyir has a reputation beyond reputemagyir has a reputation beyond reputemagyir has a reputation beyond reputemagyir has a reputation beyond repute
Re: How Safe is UBS

Quote:
View Post
Correct Abfab. What's more with Irish Deposit insurance theoretically infinity and UK deposit insurance now at GPB 50,000, the depositors in Switzerland seem to be getting cheated with their GBP 15,000 (CHF 30,000) backstop. Even the US, at the eye of this storm, guarantees deposits up to almost 10 times the Swiss level of protection. In fact I believe the Swiss deposit protection is practically the lowest in Europe. So either the SNB thinks Swiss banks are so safe that deposits don't need a realistic guarantee or maybe the Swiss government knows something we all don't! Conspiracy theory or what?
If the SNB knows something no-one else does, could they please tell someone at UBS?
Reply With Quote
  #299  
Old 06.10.2008, 12:04
Nev
 
Posts: n/a
Re: How Safe is UBS

Quote:
View Post
4B/8 Mio = 500 CHF per person in CH....great! Seems like peanuts after the Billions being thrown around elsewhere. The bottom line here is that the current "arrangements" (self-regulating) are inadequate.
My guess is top of the agenda in Berne today is when are we going to announce a 100% depositor guarantee. In a liquidity crisis the best protection for a bank is it's depositor base. The longer Switzerland delays and leaves it's depositors disadvantaged versus other countries the bigger deposit drain on Swiss banks. Maybe the government decides it will wait for a Swiss bank to get into trouble before it does a bail out and partially recapitalises the troubled bank with public money but waiting and letting deposits leave it's banks only makes that event more probable and any future rescue more expensive.

There’s a good article in Le Temps today. It says the 30,000 deposit guarantee fund is capped at CHF 4bn which equates to a 30,000 backstop for only 133,000 depositors. Small depositors with less than CHF 5,000 get paid out first within weeks. The rest have to wait for the liquidation process to complete which may take years. SO if you’re really worried, the article concludes it’s safer to withdraw you CHFs in bills and put them in a rented safety deposit box. You’ll miss out on interest of course but that’s hardly a loss given CHF rates.

Last edited by Nev; 06.10.2008 at 12:40.
Reply With Quote
  #300  
Old 06.10.2008, 12:48
Goldtop's Avatar
Forum Legend
 
Join Date: Feb 2008
Location: Zurich
Posts: 2,847
Groaned at 11 Times in 11 Posts
Thanked 905 Times in 625 Posts
Goldtop has a reputation beyond reputeGoldtop has a reputation beyond reputeGoldtop has a reputation beyond reputeGoldtop has a reputation beyond repute
Re: How Safe is UBS

Quote:
View Post
... Moreover aren't you missing the amount of taxes UBS pays to the Swiss government, the amount of employment it provides to Swiss residents and it's contribution to the overall economy...
Taxes: UBS will not be paying any taxes for many many years. They will be carrying their incurred 30B (?) losses forward and setting those off against any future operating profits.

Economy: Deposits into ZKB and other similar national financial institutions also stimulate the Swiss economy and employ people here. ZKB, etc. lend to local small-and-medium enterprises and give mortgages to solid local house buyers. The big banks use our deposits to speculate in dubious instruments in foreign countries, lend to "sub-prime" borrowers abroad and employ more people in London/NewYork than Zurich. Should Swiss taxpayers now compensate the US sub-primers?
__________________
Caveat lector!
Reply With Quote
This user would like to thank Goldtop for this useful post:
Reply

Tags
bank, banking crisis, economy, financial crisis, switzerland, ubs, usa




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Dude, where's the lawsuits? [Financial crisis] dino International affairs/politics 43 26.11.2008 09:37
Shall I tansfer GBP to canton bank for safe keeping swinburne Finance/banking/taxation 1 17.10.2008 13:50
Bank Crisis in Japan nickatbasel Jokes/funnies 1 08.10.2008 23:08
Sub-prime crisis discussion (UBS, CS et al) hugh_abu Finance/banking/taxation 244 09.05.2008 01:33
Need a safe bank Lechuga Finance/banking/taxation 11 13.04.2007 12:40


All times are GMT +2. The time now is 13:28.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2021, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0