As Europe has come to share in the global financial melt down, the elected elite of the European Union are falling all over themselves trying to place blame for the banking mess, with the United States as their major bogeyman.
The prime minister's three, U.K.'s Gordon Brown, France's Nicolas Sarkosy and Italy's Silvio Berlusconi, all have argued in recent days that the banking crisis was "made in the U.S.A."
But an article in today's New York Times finds that many European bankers were just as guilty, if not more so, than the fools of Wall Street that manufactured the fraudulent subprime mortgage derivatives that the Europeans bought by the billions.
Banking Greed
According to one commonly used yardstick to measure borrowing, the ratio of assets to equity, European banks employed more than twice as much leverage as their American counterparts.
"The same mechanisms that led to the crisis in the United States were operating here," said Arnoud Boot, a professor of finance and banking at the University of Amsterdam. "It’s totally misplaced for European leaders to put the blame on the Americans."
The Times article also states: "UBS, the Swiss giant, for example, bought tens of billions of dollars in American subprime debt in a bid for higher yields, only to find out too late that it was toxic, generating huge losses at UBS over the last year."
I Told You So
Which allows me to say: "I told you so" -- at least as it pertains to the stupidity of one the world's largest banks, UBS.
On April 07, 2008 in this blog I wrote about "The Americanization of UBS." I asked then: "What are we to make of the crass stupidity and misjudgment on the part of the mis-managers of the Union Bank of Switzerland -- UBS!?"
My question was based on the fact that by last April UBS had been forced to reveal shaky or bad investments in the realm of US$100 billion, requiring a loss charge that brought UBS’s total write-downs to over $42.5 billion — more than any other bank in the world at the time. UBS had to be bailed out with a $13 billion cash infusion from the Government of Singapore Investment Fund and others.
Swiss "Big Two" Hurt
But while the two leading Swiss banks, UBS and Credit Suisse, expanded their operations into the United States and were badly hurt, most Swiss banks are safe and untouched.
In the second quarter of the year, UBS saw net new money outflow of some 43.9 billion Swiss francs (US$39.6 billion) as customers took their assets elsewhere. Thousands transferred their funds to sound cantonal banks and the few remaining legendary Swiss "private" banks.
Patrick Odier, who is senior associate of private bank Lombard Odier Darier Hentsch, told Swiss newspaper Le Temps Thursday that clients were flocking to private bankers to safeguard their assets. "The numerous clients who are inquiring currently at our private banks are here seeking refuge, advice and expertise in asset investments," he said.
No Crisis Here
Swiss banks are coping with the global financial crisis and Switzerland is not experiencing a banking 
crisis, the head of Switzerland's banking association said on Sunday. "I am convinced that no Swiss bank will collapse," Pierre Mirabaud told Swiss newspaper Sonntag. "The Swiss banking system is healthy. The cantonal banks, the regional banks, the private banks -- they are all doing very well."
"Switzerland is better positioned than many other countries. You cannot talk about a banking crisis here. We have more than 320 banks. Only the two big banks are directly affected by the crisis," he said. But Mirabaud also sounded an upbeat note on UBS and Credit Suisse, saying they were no longer in the eye of the storm.
As Always -- Swiss Safety
Historically, over the centuries, there has been a justified belief on the part of those in the know that Switzerland is the place to safeguard cash and personal assets, especially in times of trouble. We think that still holds true.
The fact that both UBS and, to a lesser extent, Credit Suisse, got into trouble can be measured by just how far they abandon traditional conservative Swiss banking principles in a race for easy money.
Even in the current crisis, currently Swiss banks manage one third of all assets held offshore by the world's wealthy. Total cash assets of the Swiss banking system are estimated at $2 trillion or more, while the value of total securities deposits are well over $3 trillion. Assets under Swiss management have risen significantly in recent years, reaching a high of US$4 trillion in 2007, according to the Swiss National Bank and the Swiss Bankers Association.
Sovereign Society Swiss Contacts
In recent weeks we have assisted Sovereign Society members and A-Letter readers seeking safer 
banking havens, many seeking ro open Swiss bank accounts. Based on our long experience, (we always have recommended against UBS and Credit Suisse), we prefer private contacts with sound Swiss banks that have never become "Americanized." Then too, there is the strict Swiss bank secrecy law that protects financial privacy.
If you need help with Swiss banking, let us hear from you.
Of Interest
* Establishing your offshore asset plans and a possible Swiss bank account takes time and effort. And that's why we at The Sovereign Society created the "Offshore Advantage Academy" two years ago. We bring some of the biggest names in offshore (and Swiss) banking together in one place and make it easier for you to access the benefits of the Offshore World.
In a just few weeks you can join me and The Sovereign Society's Council of Experts in sunny Cancun, Mexico at our next session of the Offshore Advantage Academy to learn all how to start your own offshore plan as soon as possible. Click here for information and registration. I hope to meet you in Cancun.
* Also, one of my latest books, Swiss Money Secrets, explores in detail Swiss banking, bank secrecy, lower taxes, possible residence for foreigners and many other aspects of Switzerland and it financial policies. For your copy, click here.
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