The fallout from the corona crisis continues to hit home while new dangers lurk for banks and insurers. finews.com compiles the 11 most pressing hot spots.
1. Bonuses Teeter
Swiss banks broadly did well during the pandemic's first year, but bonuses are anything but sure: variable payouts are a hard sell during a global recession. «It’s too early to say, but generally you have to expect that bonuses will be down compared to last year and this is part of our solidarity and social responsibility,» Credit Suisse boss Thomas Gottstein said last month.
Meanwhile, Switzerland's third-largest mortgage lender, Raiffeisen, is going clean slate: the bank won't grant any individual bonuses from January, but will pool year-end payouts for team performance instead.
2. Corona's Pall
Billions in state loans helped by a wide-open spigot by central banks have cushioned the effect of the crisis of financial services so far – banks have even benefited from a trading boom last March and April as markets teetered. Still, several institutes have already flagged major write-downs on their loan books. This is set to rise this year, when state aid for companies peters out.
«Bankruptcies, if they happen, will lag by 12, 23, or even 26 months,» Raiffeisen boss Heinz Huber told Swiss tabloid «Blick» (in German) recently. Meanwhile, insurers fear premium shortfalls in a wave of insolvencies. «I don't think we've seen the full economic fallout yet,» Baloise boss Gert De Winter told finews.com last month.
3. Digital Cannibals Set Free
After Credit Suisse rolled out its CSX app (pictured above) in October, one of Basel's cantonal bank's followed suit in December. They're poised to receive company in coming months: banks are rushing to pre-empt competition from cut-rate neo-lenders like Revolut or N26.
Since the Swiss market is saturated – «overbanked» – firms can only win new clients by grabbing market share off rivals. Competition for retail clients is poised to heat up – and the $64,000 question is how market leader UBS will react.
4. Flood of Crypto Securities
The boom in digital coins – bitcoin hitting $30,000 at year-end – is grist to the mill for Switzerland's blossoming crypto scene. Providers are keen to parlay the rally into expansion, waiting to issue digital securities.
Bitcoin Suisse, founded in 2013, wants to conduct a security token offering, or STO, as part of its 2021 plan to win a Swiss banking license. Seba, which won a license 17 months ago, has also signaled plans for a token issue.
The increasingly crowded field of issuers is reminiscent of a boom in 2017 and 2018 in initial coin offerings, or frequently unsubstantiated crypto projects backed by opaque Swiss foundations.
5. Money Laundering: «Out, Damned Spot»
The boom in tokens and coins raises the stakes for financial crimefighters, international payments network Swift warned in September. Cash remains the main problem for now: as much as $2 trillion or about five percent of annual global gross domestic product is laundered, according to the United Nations. Switzerland is usually in the midst, as major South American graft scandals Petrobras and PDVSA illustrate.
Julius Baer was censured heavily by regulator Finma last year while four months ago Switzerland's prosecutor leapt into action at Credit Suisse over a decade-old Bulgarian drug cartel. Meanwhile, Swiss lawmakers continue to bicker over tightening the country's crimefighting laws, specially in refusing to expand them to advisers like lawyers and fiduciaries.
6. Ralph Hamers: Interim CEO?
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