The reputation of Russia and Russians has seen better days – especially in London. Question is, can Switzerland profit from the outfall of a worsening climate for oligarchs in the U.K.?
The worsening of the relations between London and Moscow has been steady over recent years, with the murder of Alexander Litvinenko and the poisoning of former Russian agent Sergej Skripal and his daughter standing out as two distinctly brutal chapters.
Today, the two countries seem unable to work their way back from its current icy state, with sanctions imposed by the U.S. against Russian oligarchs adding some bite. However, the rubel is still a welcome commodity in the City.
Business as Usual
Gazprom, energy giant and sponsor of the Uefa Champions League, for instance sold a bond worth 750 million euros on the London Stock Exchange immediately after the Skripal affaire broke, said German current affairs magazine «Der Spiegel» (in German). And the oligarchs are as omnipresent in Mayfair and Kensington as ever.
«Business as usual», said the Russian ambassador on Twitter recently, with a fine sense of humor befitting his posting.
Not all are so happy about the state of affairs though and are intent on changing matters. The Foreign Affairs Select Committee of the Houses of Parliament recently scalded the government for its handling of the situation. It allowed the Russian kleptocracy to wash their assets courtesy of the U.K. banking system – endangering the country’s security.
Banks, Property Dealers and Footballers Love Russian Money
They also made sure that the U.K. tax havens from the Channel to the Caribbean will have to publish the holders of offshore firms registered in those jurisdictions. And Foreign Minister Boris Johnson promised he would have a go at the oligarchs too.
For this special group of people, London for a number of years has been the safe haven outside their home country. The City understandably was happy about the customers, footballers (Chelsea FC) and property developers equally so. The financial market is said not to have looked too closely at the source of the vast riches brought to the country, making it into a magnet for illicit funds.
We Can't Afford to Be Without
The promises by politicians, ministers and a general public concerned about the events that take place on their doorsteps won’t make much of a difference. Anastacia Nesvetailova, a finance expert working at City University, wrote that the U.K. couldn’t afford to forego the dirty Russian money, according to «The Conversation». The reason given? Brexit, the impending break with the European Union.
Some Swiss banks already pared their staff in the City as capital inflows are drying up. The Russian money is all the more important.
Swiss Hopes in Vain
Swiss banks, which struggled to keep up with the British in the offshore business in recent years won’t be the obvious alternative for the Russians though. The Swiss banks have been quick in adopting measures against Viktor Vekselberg for instance when the U.S. imposed sanctions on him and his businesses.
Because what UBS and Credit Suisse fear much more than their British brethren is the heavy handed approach by the U.S. judiciary.
