Switzerland shifts gold off the books in preparation for Basel III

Swiss banks move private investors to institutional accounts.

Contrary to popular myth, there are at least a few Swiss people who won't shy away from a fight. One of them is Nicolas Pictet, chairman of the Swiss Private Bankers Association.

The American Internal Revenue Service (IRS) has been duffing up the Swiss banking industry for quite some time now. Some of the biggest Swiss banks have had to surrender their US client list to the IRS under subpoena, and the US tax authority has been dogged in its pursuit of those US citizens they have found to be using the international banking system to avoid domestic tax requirements — even little old ladies.

Now, Pictet has decided enough is enough… it is time for the banks in question to stand up and if not hit back, at least defend themselves properly.

This week we saw another move that is likely to alter the perception of Swiss banks. UBS and Credit Suisse, two of the banks at the centre of the IRS investigations, significantly raised their charges for holding gold — making it very unattractive for private individuals to deposit the precious metal with them.

The primary reason for the decision was not to stick it to the IRS, of course. Rather it is to move gold off the banks' balance sheets ahead of the introduction of the Basel III rules, which require them to change the ratio of capital to assets.

The banks are encouraging clients to move their gold deposits to “allocated” accounts, which sit outside the banks’ balance sheets and generally attract far larger fees, and are primarily aimed at institutional investors.

The rise in charges on “unallocated” will undoubtedly discourage private individuals from keeping gold on deposit with Swiss banks. One gold market analyst told me the banks were now “terrified of US clients, who account for a significant proportion of their client base”.

“The Basel III requirements are providing the banks with a good excuse to get rid of their American clients,” they said.

So is it a case of Swiss banks reflecting some of the IRS’s heat onto its US clients? That would probably be to cut off their nose to spite their face, since there are plenty of other places investors can keep their precious metals.

But it will undeniably cause private investors, both in the US and elsewhere, problems. For many, there is no more solid investment than bars of gold, and nowhere more secure - or private - to keep them than a Swiss bank.

Either way, those banks are changing their rules. And with Basel III deadlines ramping up we are likely to see even more drastic changes to the private banking landscape.

Most of those changes are likely to further weaken the relationship between Swiss banking institutions and their clients. As Pictet told his compatriots: “[Switzerland] runs the risk of being dropped from the squad and finishing the race out of time, in the complete indifference of the political world.”

While shifting gold deposits off the balance sheet might help in some way to pacify the IRS, the result may well be the erosion of Switzerland’s position in the global banking world – leaving a lot of people holding out for a turnaround in the cuckoo clock market.

Photograph: Getty Images

James Ratcliff is Group Editor of  Cards and Payments at VRL Financial News.

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What David Hockney has to tell us about football

Why the sudden glut of blond footballers? A conversation I had with the artist back in 1966 gave me a clue. . .

In 1966, I went to interview David Hockney at a rather run-down flat in Bayswater, central London. He was 28 and had just won a gold medal at the Royal College of Art.

In his lavatory, I noticed a cut-out photograph from a newspaper of Denis Law scoring a goal. I asked if he was a football fan. He said no, he just liked Denis Law’s thighs.

The sub-editors cut that remark out of the story, to save any gossip or legal problems. In 1966 homosexual activity could still be an offence.

Hockney and a friend had recently been in the United States and had been watching an advert on TV that said “Blondes have more fun”. At two o’clock in the morning, slightly drunk, they both went out, bought some hair dye and became blond. Hockney decided to remain blond from then on, though he has naturally dark hair.

Is it true that blonds have more fun? Lionel Messi presumably thinks so, otherwise why has he greeted this brand-new season with that weird blond hair? We look at his face, his figure, his posture and we know it’s him – then we blink, thinking what the heck, does he realise some joker has been pouring stuff on his head?

He has always been such a staid, old-fashioned-looking lad, never messing around with his hair till now. Neymar, beside him, has gone even blonder, but somehow we expect it of him. He had foony hair even before he left Brazil.

Over here, blonds are popping up all over the shop. Most teams now have a born-again blondie. It must take a fortune for Marouane Fellaini of Man United to brighten up his hair, as he has so much. But it’s already fading. Cheapskate.

Mesut Özil of Arsenal held back, not going the full head, just bits of it, which I suspect is a clue to his wavering, hesitant personality. His colleague Aaron Ramsey has almost the full blond monty. Paul Pogba of Man United has a sort of blond streak, more like a marker pen than a makeover. His colleague Phil Jones has appeared blond, but he seems to have disappeared from the team sheet. Samir Nasri of Man City went startlingly blond, but is on loan to Seville, so we’re not able to enjoy his locks. And Didier Ndong of Sunderland is a striking blond, thanks to gallons of bleach.

Remember the Romanians in the 1998 World Cup? They suddenly appeared blond, every one of them. God, that was brilliant. One of my all-time best World Cup moments, and I was at Wembley in 1966.

So, why do they do it? Well, Hockney was right, in a sense. Not to have more fun – meaning more sex – because top footballers are more than well supplied, but because their normal working lives are on the whole devoid of fun.

They can’t stuff their faces with fast food, drink themselves stupid, stay up all night, take a few silly pills – which is what many of our healthy 25-year-old lads consider a reasonably fun evening. Nor can they spend all their millions on fun hols, such as skiing in the winter, a safari in the spring, or hang-gliding at the weekend. Prem players have to be so boringly sensible these days, or their foreign managers will be screaming at them in their funny foreign accents.

While not on the pitch, or training, which takes up only a few hours a day, the boredom is appalling, endlessly on planes or coaches or in some hotel that could be anywhere.

The only bright spot in the long days is to look in the mirror and think: “Hmm, I wonder what highlights would look like? I’ve done the beard and the tattoos. Now let’s go for blond. Wow, gorgeous.”

They influence each other, being simple souls, so when one dyes his hair, depending on where he is in the macho pecking order, others follow. They put in the day by looking at themselves. Harmless fun. Bless ’em.

But I expect all the faux blonds to have gone by Christmas. Along with Mourinho. I said that to myself the moment he arrived in Manchester, smirking away. Pep will see him off. OK then, let’s say Easter at the latest . . . 

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times