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After a Suicide, Chairman of Zurich Insurance Quits

August 29, 2013 by

ZURICH — Josef Ackermann, the chairman of Zurich Insurance, resigned on Thursday over the apparent suicide of the insurer’s chief financial officer, further roiling the top ranks of the company.

Mr. Ackermann said the family of Pierrer Wauthier, who worked at Europe’s No. 3 insurance group for 17 years, believed he shared some of the blame for his death.

“I have reasons to believe that the family is of the opinion that I should take my share of responsibility, as unfounded as any allegations might be,” he said in a statement Thursday. “As a consequence, I see the possibility of a continued successful board leadership to the benefit of Zurich called into question.” A Zurich Insurance spokeswoman did not elaborate on what allegations Mr. Ackermann was referring to. Mr. Wauthier, who had a wife and two children, was found dead Monday at his home in Zug, a lakefront suburb of Zurich.

Returning to his native Switzerland after leaving the top job at Deutsche Bank last year, Mr. Ackermann became a forceful advocate for the Swiss financial sector.

Tom de Swaan, vice chairman, will take over as acting chairman, the insurer said.

Zurich Insurance’s top ranks have seen considerable change in the last 12 months. The former head of its general insurance division, Mario Greco, left in the middle of last year to become head of the Italian insurer Generali. Two weeks ago the head of Zurich’s life insurance arm, Kevin Hogan, left to become head of consumer insurance for American International Group.

“When the chairman leaves after you’ve already lost your head of global life, Mario Greco, and then the unexpected loss of Pierre Wauthier as C.F.O., it will lead to more uncertainty,” Daniel Bischof, an analyst at Helvea, said.

Zurich said on Aug. 15 that it would be hard pressed to meet certain performance targets after posting a 27 percent decline in net profit for the second quarter. The insurer cited natural disaster payouts, which were higher than those of other European insurers because of its high exposure to the United States.

Article source: http://www.nytimes.com/2013/08/30/business/global/after-a-suicide-chairman-of-zurich-insurance-quits.html?partner=rss&emc=rss

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DealBook: 2 European Banks Post Mixed Results

October 26, 2011 by Leave a Comment

FRANKFURT — As European officials struggle to find a solution to the sovereign debt crisis, two of the region’s largest financial firms continue to deal with the fallout from the market turmoil.

On Tuesday, Deutsche Bank exceeded quarterly profit expectations, but Germany’s largest lender warned of jobs cuts in the investment bank, following a drop in trading revenue stemming from the market mess. Under similar pressure, the Swiss bank UBS, which also was hurt by a trading scandal that cost it $2.3 billion, reported that earnings fell 39 percent in the third quarter, from a year earlier.

Profits at banks around the world have plunged, particularly in investment banking. Fearing that another financial crisis is brewing, regulators and shareholders are pushing financial firms to temper risk — all of which is weighing on operations.

Deutsche Bank reported profit of 777 million euros, or $1.1 billion, in the three months ended Sept. 30, compared with a loss of 1.2 billion euros a year earlier. But pretax profit in the corporate banking and securities division, which includes the investment bank, plunged to 70 million euros in the quarter from 1.1 billion euros a year earlier. Owing to the poor performance, Stefan Krause, the bank’s chief financial officer, said further job cuts were possible, on top of the 10 percent reduction already under way.

Josef Ackermann, the chief executive of Deutsche Bank, said the climate for banking was “more difficult than at any time since the end of 2008” because of a deteriorating economy and financial market turbulence. “Our performance was, inevitably, impacted by this environment,” Mr. Ackermann said in a statement.

At UBS, profit fell to 1.02 billion Swiss francs, or $1.15 billion, in the three months ended Sept. 30, from 1.66 billion francs in the period a year earlier. The pretax loss at the investment banking unit widened to 650 million francs from 406 million francs because of the trading loss, while earnings at the wealth management unit rose.

Sergio P. Ermotti — the interim chief executive who took over after the resignation of Oswald J. Grübel in the wake of trading scandal — is now scaling back the struggling investment banking operation, to free up capital to invest in wealth management. UBS is expected to present its new strategy for the unit to investors in New York on Nov. 17.

“Current market conditions and trading activity are unlikely to improve materially, potentially creating headwinds for growth in revenues and net new money,” UBS wrote in a letter to shareholders. But it added that a plan to reduce costs and scale back its investment banking operation meant “we have every reason to remain confident about our future.”

The sovereign crisis may have additional short-term implications for Deutsche Bank. Political leaders are pushing banks under their purview to increase their reserves so they can withstand a default by Greece on its government bonds, a possibility that seems increasingly likely.

Deutsche Bank, which reported a loss of 185 million euros related to holdings of Greek bonds in the quarter, is among institutions that may need to raise more capital.

European regulators are expected to push banks to raise their Tier 1 equity ratio, a measure of reserves on hand, to 9 percent by June at the latest. While Deutsche Bank exceeds that standard now, regulators will probably impose tougher criteria that take into account possible damage caused by the sovereign debt crisis or a slumping economy. In that case, Deutsche Bank’s reserves might sink below the minimum.

Mr. Krause said the bank would be able to increase its capital without resorting to government aid, by retaining future profits rather than paying them out to shareholders, for example.

Julia Werdigier reported from London.

Article source: http://feeds.nytimes.com/click.phdo?i=d938453420dc182f593ac191a08faf58

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Euro Zone Leaders Get Warning From Central Bankers

September 5, 2011 by Leave a Comment

Jean-Claude Trichet and Mario Draghi, the current and incoming presidents of the European Central Bank, had a sharp message for Europe’s leaders Monday as financial markets swooned: Get your act together.

At a conference in Paris focusing on the world three years after the collapse of Lehman Brothers, Europe’s top central bankers couched their admonishment in diplomatic terms. But the warning was clear: Politicians are still not moving quickly enough to ensure that the European debt crisis doesn’t become seriously worse.

“The solvency of sovereign states should not be taken for granted,” Mr. Draghi said as the bond yields of Greece, Italy and other countries with weak finances jumped amid increased investor nervousness. Global stocks also posted steep declines amid worries about the health of the U.S. economy and Europe’s sovereign debt woes.

Europe needs to “make a quantum step up in economic and political integration,” Mr. Draghi said.

Mr. Trichet, who will be replaced by Mr. Draghi when his term expires at the end of October, renewed his call for European politicians to “imagine a federal government, with a federal finance ministry,” a setup that would make the monetary union look more like the United States.

But it is one that Germany and other countries are wary of pursuing because it could undermine their sovereignty.

These institutions, Mr. Trichet added, would have the power to “impose decisions on countries” whose own policy decisions threaten the rest of the euro zone, he said.

Their remarks came as European investors and bankers, including Josef Ackermann, the chief executive of Deutsche Bank, warned that the renewed volatility in stock and bond markets was starting to feel eerily like the days surrounding Lehman Brothers’ collapse.

“All this reminds one of the fall of 2008, even though the European banking sector is significantly better capitalized and less dependent on short-term liquidity,” he said Monday at a conference in Frankfurt, Bloomberg News reported.

His comments were echoed by other players in the financial industry.

“I fear the probability is rising of a crisis in the fall, because there’s no more political margin for maneuver,” Denis Kessler, president of SCOR, a global reinsurance company based in France, said at the conference in Paris.

Benoit d’Anglelin, who was a Lehman banker for 15 years and is now a manager at Paris-based Ondra Partners, said he was seeing “extreme risk aversion now” by pension funds and institutional investors, which have been dumping “everything risk-related” since March, including a large number of shares in French companies.

“It’s becoming unsustainable,” he said. “Imagine what will happen if the selling gets more serious.”

Despite pledges by European leaders in July to pump billions of euros more into a European Union bailout fund for debt-stricken countries known as the European Financial Stability Facility, it is not so clear that parliaments in the 17 nations that are members of the euro club will approve an expansion.

Voters disillusioned with Germany’s role in supporting Greece and other troubled euro countries dealt Chancellor Angela Merkel’s party a fifth defeat this weekend in local elections, raising concerns among investors about whether she can muster enough votes to expand the fund.

On Sunday, Reuters reported, Slovakia added fuel to the fire when a politician said the parliament would not vote until December at the earliest on whether to expand the E.F.S.F., much later than an early October deadline targeted by European officials.

“We have an absolute and total need for all of the decisions to be implemented immediately,” Mr. Trichet warned at the Paris conference. Delays or uncertainty, Mr. Draghi, added, “risk re-igniting market turbulence.”

Indeed, with a debt crisis threatening to worsen in Europe, and persistent economic weakness in the United States, markets have been moving more quickly to punish countries whose politicians are slow to make crucial decisions.

“This is not going to go away,” Mr. Draghi said.

In Mr. Draghi’s own country, Prime Minister Silvio Berlusconi again unnerved investors last week by chipping away at a sweeping €45.5 billion, or $64 billion, package of austerity measures to help Italy stave off a sovereign debt crisis. His backtracking drew a warning from Mr. Trichet over the weekend to stay on course.

Meanwhile, Finland has also cast doubt on pledges of European unity by insisting that it receive collateral from Greece in return for aid, another issue that threatens to upend plans to expand the bailout fund.

Mr. Draghi said that early warnings that the euro monetary union was “incomplete” because it lacked political cohesiveness had been papered over by banks and advocates who wanted to get the euro up and running at all costs.

“Now we are discovering that we can’t live with this incompleteness any longer,” he said.

Article source: http://www.nytimes.com/2011/09/06/business/global/euro-zone-leaders-get-warning-from-ecb.html?partner=rss&emc=rss

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