'Stop preying on UBS'

Zurich - Swiss central banker Philipp Hildebrand wants state-backed banks to stop preying on Swiss banking giant UBS, saying in an interview published on Sunday that such a move was against taxpayers' interests.

Disillusioned by massive losses incurred by UBS over the subprime mortgage crisis in the United States, UBS clients have been leaving in droves for cantonal banks, many of which are backed by cantons and therefore deemed a safer place to safeguard assets.

Some cantonal banks have also advertised their state-guarantee, while others are offering cash gifts to lure new customers.

Hildebrand said in an interview with the Swiss newspaper Sonntag that such action ran counter to taxpayers' interests, given that the state had bailed out UBS with a package worth almost $60bn in a bid to stabilise the financial centre here.

"It should not be that the Federation and National Bank take Switzerland's financial centre under its arms through billions, and the cantons work against this through their banks.

"This is absurd from the point of the taxpayers who are involved in both sides," said Hildebrand, who is the vice-chairperson of the Swiss National Bank's governing board.

He said he would go as far as to ring individual banks to get them to close ranks in the crisis.

"Or cantonal banks and other banks should commit themselves to an ethical code that is in the interest of the financial centre," he said.

UBS has come under sharp criticism since it lost billions in the ongoing financial crisis and was forced to seek help from the state.

Bank chairperson Peter Kurer's revelation that he could not rule out that "bonuses in the tens of millions of francs" would be paid out this year sparked outrage among politicians and the Swiss public.

Hildebrand said he would not go as far as to name a figure for what would be considered a "decent" bonus for bankers in the future.

"But I think we would rather quickly find a consensus," he said.

Meanwhile, another storm may be brewing for UBS, after another Sunday newspaper SonntagsZeitung said that the bank was offering a 10% pay hike for client consultants to try to stop workers from leaving.

The newspaper said it knew of a dozen cases of UBS workers who have received notification of the pay increase which took effect on November 1.

The move sparked angry reaction among politicians, including the head of the Green Party Ueli Leuenberger, who called the move "simply scandalous".

- AFP