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Reuters – A hedge fund exodus from London to Switzerland in the face of higher taxes and tougher EU rules is unlikely to occur this side of a British general election, although the industry pretender remains ready to pounce.
Eyeing a new lakeside life of lower taxes and softer rules, many fund managers have said they would leave London’s glitzy lights for good if the Labour Party’s plan for a new 50 percent top tax rate becomes reality.
Earthtimes – Julius Baer, one of Switzerland’s largest wealth managers, reported Monday a net profit of 324 million Swiss francs (303 million dollars) in the first half of the year, down 37 per cent compared to the same period in 2008.
The private bank said it had 299 billion Swiss francs of assets under management at the end of June, 25 per cent less, year-on-year. Compared however, to the end of last year, when the financial markets were in turmoil, the bank said its position had improved and was experiencing inflows of new capital.
The bank dropped 2 per cent of its workforce, which now stands at 4,255 staff, and personnel expenses fell by 13 per cent to 587 million francs, reflecting a lowering of performance-related bonuses.
Globe and Mail – Paris, so far, has emerged as the most serious challenger. But Mr. Sarkozy may be his own worst enemy on this file. The reason: He and his German allies are wholesale supporters of the European Union effort to rein in the hedge funds even though the funds can take little blame for the financial disaster.
If Mr. Sarkozy gets his way, the funds, which are a huge business in London, won’t jump on the Eurostar and re-emerge in Paris. They will leave the EU entirely for Switzerland (not an EU member; some funds have already moved there) or any of the financially ambitious Middle East and Asian cities – Abu Dhabi, Singapore, Shanghai – which are dangling gold and pearls before the big-name fund managers.
World Radio Switzerland – Several major hedge funds in London say they’re considering moving abroad, notably to Switzerland. They are angered by a proposition from the European Union that would require more accountability and limit the amount of money they can borrow. Switzerland is an attractive destination because it is easier to register and launch a hedge fund, and subsequent regulation is less constraining. Does that mean this is the wild west for shady financial institutions? No, say the experts. It just means Switzerland has struck a better balance between flexibility and oversight. Lucas Chambers reports for WRS.
Reuters – Many of Switzerland’s smaller fund of hedge funds providers could be forced to consolidate in order to cover increasingly onerous expenses if they are unable to attract significant assets, a Swiss academic said on Monday.
The small average size of Swiss funds of funds produced low income from management fees, making it more difficult for funds to achieve economies of scale, Peter Meier, head of the centre for alternative investments and risk management at the Zurich University of Applied Science, said in a presentation in Zurich. "I’m sure there are many funds around which no longer have the asset base to cover their costs. Some will need to attract more assets to survive," Meier told Reuters after the presentation on Swiss fund of hedge funds.
Bloomberg – Switzerland is the world’s most attractive financial center for the “mobile wealthy,” beating London, Singapore and New York, according to a new survey by Scorpio Partnership.
The Alpine nation ranks highest for economic and political stability, legal issues, children’s education and infrastructure, the London-based wealth management adviser said. Switzerland placed fifth for tax and immigration, behind Monaco, Singapore, Cayman and Hong Kong.
“To the mobile wealthy, Switzerland is very nearly all things to all people,” said Scorpio Director Stephen Wall. It “has been and will continue to be the biggest beneficiary of moves away from London.”
Indopia – Britain’s leading entrepreneurs are considering to leave the country as a mark of protest against UK Chancellor Alistair Darling’s new 50 per cent tax rate, a media report says.
" Hugh Osmond, the pubs to insurance entrepreneur, is thinking about a move to Switzerland. Peter Hargreaves, the 10 million-pound-a-year co-founder of Hargreaves Lansdown, the financial adviser, is looking at the Isle of Man or Monaco," the Sunday Times said adding," More are likely to follow."
As per the latest budget, from next year anyone earning more than 150,000 pounds a year will have to pay 50 per cent as income tax. The move replaced the 45 per cent tax bracket threatened in the pre-budget report last November.
Businessmen have warned that raising taxes on the rich would do nothing to boost the exchequer, as the wealthy can always find ways to avoid it.
Bloomberg – U.S. hedge funds are buying more of the nation’s stocks than they’re selling for the first time since October, while mutual funds and most other investors remain net sellers, according to UBS AG.
In the four weeks ended March 13, net purchases of equities by hedge fund clients of UBS averaged $140 million, according to a March 18 report by David Bianco, the New York-based chief equity strategist at Switzerland’s biggest bank. The inflows into stocks followed 22 straight weeks of outflows.
“Those who are supposedly experts at assessing and managing risk are more confident putting capital to work than they were in October and November,” said Peter Kenny, managing director in institutional sales at Knight Equity Markets LP Jersey City, New Jersey. “That’s an indication that the market has made some constructive moves toward building a base.”
Reuters UK – Credit Suisse clients may have lost up to 1 billion Swiss francs (627.3 million pounds) ($195.18 mln) on investments connected to accused swindler Bernard Madoff, newspaper Sonntag reported on Sunday.
Without giving details of its sources, Sonntag reported that internal forecasts at Credit Suisse showed that customers of Switzerland’s second-largest bank could have lost 0.9-1.0 billion francs in the Madoff case.
Credit Suisse spokesman Jan Vonder Muehll said: "Credit Suisse did not actively recommend or sell products invested with Bernard Madoff.
"Furthermore, none of the funds of hedge funds offered by Credit Suisse contained holdings in Madoff funds."
