Credit Suisse and more information on UBS.
This is one of the earlier posts I wrote and did not publish. The information is still valid and in the case of UBS adds to the first three posts I did about them. Some of this information has now been pulled off the UBS site, but is still in my notes. I am not editing this post from its original form. The reading is stiff, but the information is worthwhile.
I hardly recognized most the foreign banks that got money from the AIG bailout, so I picked a name and began. What I discovered is that the global empire of banking is not a myth; the banks share common interests, focus, concerns, and are frequently related by family or merger as well as by expansion. Pay attention to the names of those mergers and acquisitions; some of them ought to raise red flags.
[Most of the information here is available at each bank’s home web page. I did have to move around a lot, so I am not showing specific links. If you need further details, leave me a message.]
Let’s start with Switzerland. There are only two banks: UBS which received $5 billion and Credit Suisse which received $0.4 billion for a grand total of $5.4 billion to Switzerland.
Why? Credit Suisse sold Lehman “products” to investors. UBS? well,that’s a whole ‘nother story.
I. Credit Suisse.
The bank was founded in 1856 to promote the industrialization of Switzerland, with a focus on the railroads. The bank did not open an office outside of Switzerland until 1942 when it opened a branch in N.Y. Its investment banking unit was called Suisse Bank First Boston as a result of acquisition of First Boston in 1988. It merged with another bank in 1996 and the name Credit Suisse came back into use; another merger followed in 1997 with the Winterthur Group, an Insurance Co. In 2008, it acquired 80% of Asset Management Finance Corp. Credit Suisse (and unnamed banks) is currently under investigation in Switzerland for selling “Lehman-issued products with a view to discerning whether clients were adequately informed” when they were investing in Lehman Brothers before the collapse. (here)
SBC started in 1854 as a consortium of 6 banks, became a Joint Stock Co. in 1871, and the Swiss Bankverein (Swiss Bank Union) in 1896. In this year, a London Office was opened. [The early history of the bank is essentially mergers and new offices which are not of much interest for my purposes.]
In 1917, the bank changed its name again to the Swiss Bank Corporation. More mergers followed SBC’s opening of an agency in N.Y. In 1951, a Swiss Corporation for Canadian Investment was opened in Montreal and an Office was opened in Rockefeller Center in N.Y.
By 1962, SBC is the second largest bank in Switzerland; #3 belongs to Credit Swisse. Expansion follows with a operations unit in S.F. (1965),The Bahamas (1968), Sydney (1970), a Basle Securities Corp. in N.Y. and SBC Financial Ltd in Montreal (1970). A branch office is opened in Chicago (1974), followed by more acquisitions and new branches. In 1987 SBC partners with a U.S. derivative house in Chicago – O’Connor & Assoc.- which it takes over in 1992.
1995 is a big year for SBC. It establishes SBC Capital Markets NY, integrates O’Connor and Assoc. in Chicago, acquires S.G. Warburg Plc London (a European Investment Bank) and Brinson Partners (an Institutional Management firm in Chicago), and now owns 99% of the Swiss Bank of Italy.
In 1997, SBC acquires Dillon Read and CO (an International Investment Bank which is incorporated into the SBC-Warburg division as SBC Warburg Dillon Read).
SBC also announces a planned merger with UBS which will create on of the largest banks in Europe and the largest Private Banking and Assessment Management Institutions. UBS will become one of the 4 largest financial services companies in the world.
In 1917, The Union Bank of Switzerland arises from the merger of its two banks, one in Winterthur and one in Wil. In 1940, it establishes America-Canada Trust Fund AMCA and Union America Corporation in N.Y. (for custodial purposes).
By 1962 UBS has become the largest bank in Switzerland (see above for #2 & 3). Acquisition and Expansion become its operational priority.
A London branch is open in 1968; an American unit, a unit in Bermuda and a representative office in Bogota, Columbia are opened in 1970.
In 1971, Deutsche Bank takes a 50% holding of UBS and the American Branch is renamed UBS-DB Corporation. A representative office is opened in Chicago in 1973 as well as a branch in Toyko. In 1975, a branch is opened on Wall Street. as is UBS Securities in London, and a representative branch in Moscow.
in 1976,UBS acquires 56% of Swiss bank SHHB, which becomes a private banking subsidiary of UBS and is renamed HYPOSWISS. Representative offices are also open in Dubai and Toronto this year, followed by branches in the Caymen Islands (1977) , Los Angeles and Chicago (1978). In 1987, UBS creates UBS Asset Management Limited in the U.K. as well as Regional Management UK in London. In 1991, UBS acquires Chase Investors of NY and renames it UBS Asset Management Incorporated.
UBS merges with SBC, which disappears as a separate entity.
An acquisition of BofA Private Banking in Europe and Asia occurs in 1999, along with the acquisition of Global Asset Managment in Bermuda, Allegis Realty Investors (for UBS Brinson). In 2000, Brinson Partners in Chicago and Philips & Drew in London merge their investment management. Paine Webber and UBS merge to create the 4th largest private client firm in the U.S. UBS acquires Fondvest A.G. (asset management in Switzerland). UBS acquires RT Capital Management of Canada (renamed Brinson Canada).
In 2002, UBS (now considered by many as the largest private bank in the world) sells HYPOSWISSS and unites all UBS asset management companies as UBS Global Asset Management. This included asset management companies in Europe, the Mideast, Africa and Asia-Pacific as well as Brinson holding in the U.S. and Canada and Philips & Drew in the U.K.
→→→As an aside, I’d like to mention that in 2002 UBS-Warburg was doing business with Enron for an exclusive license to the technology to operate North American naural gas and power trading operations. I have no idea whether they profited or not from the Enron scandal.
Lloyd’s Bank S.A. which is the French Wealth management division, is acquired and renamed USB Wealth Managment S.A in 2003. That same year UBS acquires ABN AMRO‘s U.S. prime brokerage operations, and the private client business of Merrill Lynch in Germany. In 2004, UBS acquires Laing & Cruickshank (U.K. wealth management service), Charles Schwab Soundview Capital Markets, opens a Beijing Branch, and acquires wealth operations of Dresdener Bank LateinAmerika and Julius Baer in North America. In 2005, UBS takes a major stake of Siemens real estate funds business in China, forms a joint venture with the Chinese State and Development Investment Corp. and then signs an agreement of cooperation with the Bank of China. It also merges Wealth Management and Investment Bank and the UBS distribution arm of Global Asset Management into Deutschland AG. UBS also sells its private banks and GAM (asset management) to Julius Baer.
2006 is another good year for UBS acquisitions: UBS Bunting Ltd in Canada, the private client branch of Piper Jaffray Co (wealth management in the midwest and west U.S., ABN AMRO’s global futures and options business, Banco Pactual in Brazil, and the branch network of McDonald Investment, a unit of Key Corp. It also poises to open offices in Russia, India, Dubai, and Mexico. In 2007, it opens an office in Moscow, acquires 51% of a Japanese firm (Daehan Investment Trust Management) which will now operate as UBS Hana Asset Management Company Ltd.
This is the same year in which UBS is affected by the U.S. sub-prime residential mortgage business and initiates changes in management and oversight of risks.
Why didn’t our banks see it and initiate changes in management and oversight?