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Quest Means Business
Swiss Banking Crackdown; New Disclosure Rules for Swiss Banks; Banking Under Pressure; White Collar Crimes; Israel's Future; Zurich: Switzerland's Powerhouse
Aired January 28, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Scandal, restructuring, survival. Tonight, the Swiss banking industry, as the program's from Zurich.
Coalescing around a coalition in Israel. We speak to the country's finance minister.
And BlackBerry's back and hoping for a 10 out of 10.
I'm Richard Quest, live in Zurich, where yes, I mean business.
Good evening from Zurich, a city with a rich and venerable tradition of banking, where institutions are bound by a code of secrecy. Tonight on QUEST MEANS BUSINESS, we shed light on the industry today.
We're coming to you live from the Storchen Hotel in Zurich. Incidentally, this is, I'm told, the oldest hotel in Switzerland. The oldest hotel, and tonight we'll be discussing some of the newest problems in banking.
From Iceland, where the government today won a landmark case over the collapse of its savings bank, Icesave, in the United States, where regulators are scrutinizing, the tax affairs of wealthy citizens who bank here. And we'll hear from the heads of some of Switzerland's biggest bank, Julius Baer on UBS on what's next for the industry.
2013 marks a watershed moment for Swiss banks. The industry is now working under a new international code of conduct as the US crackdown on tax evasion continues. Four years ago, UBS paid $780 million to the US. It admitted helping American taxpayers hide their money from the IRS. It led to the unprecedented move, as they said, of handing over account details to the US government.
Two years later, Credit Suisse announced it was the subject of a criminal investigation by the United States. Seven bankers indicted.
Now, as of January the 1st, new disclosure rules are in force. That's after Switzerland signed up to the US Foreign Account Tax Compliance Act. The stakes are high. Switzerland's oldest bank, Wegelin, was shut down after it admitted helping to hide more than $1 billion of American taxpayers' money. It's the first time the US has forced a foreign bank to close.
Now, the issue of banking standards was the talk of the World Economic Forum right from the word go. At one of the first major panel discussions, JPMorgan's chief exec, Jaime Dimon, said a lack of total transparency was simply a fact of life.
(BEGIN VIDEO CLIP)
JAIME DIMON, CEO, JPMORGAN CHASE: Businesses can be opaque. They're complex. You don't know how aircraft engines work, either. And I don't -- there will be a financial services business. Loans, equity, capital markets, mortgages, all those things would be required.
(END VIDEO CLIP)
QUEST: Boris Collardi is the chief executive of the Swiss bank, Julius Baer, joins me now. Good evening to you, sir.
BORIS COLLARDI, CEO, JULIUS BAER: Good evening, Richard.
QUEST: Nice to have you with us in Zurich.
COLLARDI: Thanks for having me.
QUEST: So, the first question is, does the Swiss banking industry -- and I know you're not the representative of them all, but you're a big bank and you're here. Do you feel that the -- obviously, there's time for change and restructuring, and a need for new rules.
COLLARDI: Absolutely. And that's something that takes time, but I think everyone is aware of it, and we're going through this period of change. It just needs a little bit of time for an industry that has a deep tradition.
QUEST: But the perception of the Swiss secrecy and all that I just talked about, how real is that secrecy today? Because there is a definite conflict, isn't there, between the wishes of other countries that blow it apart, and the needs of the industry here to maintain it?
COLLARDI: I think the banking secrecy as we used to know it is evolving towards more client confidentiality and --
(AUDIO GAP)
COLLARDI: -- are going to adapt over time to the international standards.
QUEST: Are the two incompatible, though? Because if the secrecy or confidentiality, as you would put it, goes away, inevitably, don't you lose the very thing that is prized about Switzerland?
COLLARDI: I don't think so, actually. Switzerland would be reduced, really, to nothing if it was all about only banking secrecy. I think the quality of advice, the center of competence is second to none. International competence center is probably one of the best in the world for private banking.
QUEST: So, if we talk about the banking industry and this question of ethics and this question of how to put things right, well, I suppose first of all, how did things go so wrong?
COLLARDI: I think there lies always when you're in a period of growth, maybe a number of areas are overlooked and some people, minority of people, may take advantage of the lack of oversight. But I think now as we're in a period of restructuring, everybody has to get back onto a straight jacket and look back at putting the regulations in place that ensure good practices.
QUEST: It's ethics, isn't it?
COLLARDI: It's trust, it's ethics, and at the end of the day, I think we're suffering today also from the business models that maybe evolved away from what the banks are made for, which is basically supporting also the real economy.
QUEST: Do you feel that the banking system has been targeted unfairly?
COLLARDI: It's very easy to say maybe after the fact, but I think there needs to be work -- redemption that needs to be done by the banking secrecy. But I think we also at some stage need to move on.
QUEST: What -- you say redemption of banking secrecy. What about redemption on ethics?
COLLARDI: Ethics are never an easy thing to, I would say, judge an industry by. But I think if any decision you make could be right tomorrow on the front of the newspaper, then --
(CROSSTALK)
QUEST: Is that something you keep in your mind?
COLLARDI: Absolutely.
QUEST: That every decision you could be making, tomorrow morning you could be reading about on the front page and people saying why's he done it?
COLLARDI: I guess that's the ultimate test.
QUEST: Do you still enjoy it?
COLLARDI: I very much enjoy it. There's a spirit of transformation, and I think there is nothing more exciting to be in financial services right now. But we're all hoping that at some stage, issues are put to bed and we can resume our normal course of business, the new business, the real economy business.
QUEST: Good to see you, sir. Thank you for joining us.
COLLARDI: Thanks.
QUEST: Cold evening, but you're used to it here.
COLLARDI: Absolutely.
QUEST: You're used to it. Please.
COLLARDI: Thanks a lot.
QUEST: It's only the newcomers like me that have these problems. Now, UB -- thank you very much. UBS's chairman, Axel Weber, says that the entire banking industry is under pressure from regulators. At the World Economic Forum in Davos last week, Axel Weber told me in the wake of the libor scandal, he was under no doubt it's a good thing.
(BEGIN VIDEOTAPE)
AXEL WEBER, CHAIRMAN, UBS: These issues we're dealing with are industry issues. Barclays and UBS have been the first to deal with them and to reach global settlements, but the whole industry is under pressure and under regulatory surveillance and need to get on top of that.
What I can be reassuring you of is we are a very -- we have a bifocal view on how we want to change UBS. The first one is, you need to get your strategy right on what UBS is in the long run. We've changed the strategy, we focus on our wealth management business, and we're reducing the size, the complexity, and we're changing the client focus in the investment bank.
That's been a good thing to do, and it's only one part of the work we do. The other one is you need to deal with your past, and UBS has to deal with its past in all dimensions. We dealt with the libor issues. I've been a regulator before. There are many issues in all the banks, and we need to systematically scan the problems in the bank.
QUEST: So, how far are you in that process of scanning and fixing, do you believe?
WEBER: I think we've fixed most of the known knowns, so to say. We're still looking whether there are any unknown issues that we need to tackle in order to move forward in a very credible way.
QUEST: There's an air of being just horrified that this industry that is so important to the world managed to get so far off the track, isn't it?
WEBER: Absolutely, and I'm not in the industry for that long. It's actually only seven months, because I used to be a regulator and a central banker.
(LAUGHTER)
WEBER: And so, what -- I had no illusion when I came to the industry that basically the first two years of my job as chairman of a global bank have to do with dealing with legacy, and at the same time getting the right focus for the future.
And there are many issues in the banking industry -- the strategy, the capital requirements. I think the new regulation is actually a good thing, and despite some of the rumors, more capital and more liquidity planning is much better for the banks.
QUEST: But the -- coming at it from the central bank point of view, on a macro level, the level of which this industry managed to become unethical or ethically unsound is really very troubling.
WEBER: And very clearly so. It's been a total disgrace, and we really said very clearly, the conduct that we found at UBS when the bank was rescued and when we looked at conduct was simply unacceptable.
The CEO, Sergio Emotti, and myself made very clear to everyone, we expect different conducts, different ethical values from our employees. And we dealt with those that have misbehaved.
Many of them had left UBS already before, many others we separated from, and those that had smaller misconduct, there was disciplinary action. So, you need to deal with the issue, and you need to help people to come around to a new world.
(END VIDEOTAPE)
QUEST: Helping people to come around to a new way of working. It's a carrot and a stick. Jeffrey Neiman is one of the four US Department of Justice attorneys who prosecuted UBS in 2009. Mr. Neiman now joins me from CNN Miami in Florida. Are you of the view that the banking industry has learned its lessons, and that now we could -- that that trust can be rebuilt, Mr. Neiman?
JEFFREY NEIMAN, FORMER US FEDERAL PROSECUTOR: I think the jury's still out on that question. I think Swiss banking secrecy as we knew it is dead, and the US government right now is going to make sure that big banks and small banks, not just in Switzerland, but around the world, are making -- or becoming complaint, are getting ahead of these actions, are trying to get them into compliance as best they can.
And look, we'll see. We'll see how the executives of all these various banks, how they react.
QUEST: But is it a case, still, of carrot and stick? And if so, which should we be thinking more of?
NEIMAN: I think the US government right now is no doubt using the carrot and the stick approach. And without the stick, without the threat of criminal prosecution, without the threat of putting banks like Wegelin out of business, there really is no incentive for some of these banks in foreign jurisdictions to deal with the United States, to come into compliance, to turn over names, to pay money back to the United States for taxes, in which these banks helped Americans conceal money overseas at.
QUEST: But -- at what point does the US actions become, to some extent, bullying? To when the US basically, because it's the largest market in the world, because it is the biggest on the block, is imposing its will where, perhaps, it should, perhaps, not do so?
NEIMAN: I think that is a very fair question. How do you -- let's take the case of Wegelin, for example. Here you had a bank in Switzerland -- this is the smallest, or the most historic oldest bank in Switzerland who just got indicted and put out of business here int eh United States for committing acts that aren't even a crime in Switzerland.
The US jurisdiction apparently has no reach, and how far this goes and when someone's willing to step up and say come on, let's be realistic, I guess is an open question. But the US government, with its market share, with US securities being what they are, are trying to impose their will on banks around the world to make disclosures to the United States. And how fair that is is up for debate.
QUEST: Well, come on. Off the fence, Mr. Neiman? What do you think? You're one of the prosecutors, admittedly maybe in more egregious places. Do you believe that the US is throwing its weight around too much?
NEIMAN: I think if Swiss bankers stopped acting like Swiss bankers, if Swiss bankers start playing games and acting instead like James Bond assistance, helping to disguise of tourism versus business travel, suitcases of cash being carried around and passed through airports.
When Swiss bankers stop acting like bankers, there need to be criminal repercussions. But the US government needs to make sure that they're reserving this heavy-handed action for for the extreme case, for the act in which there is clear criminal conduct.
And I'm not sure that's always the case, especially for some of the smaller banks in Switzerland who never came to the United States.
QUEST: Jeffrey Neiman, good to have you on the program from the warms and deligthfuls of Miami. We are, of course, in the cool and cold of Zurich tonight, and when we come back, we'll go to the Middle East.
A new chapter begins in Israel as Prime Minister Benjamin Netanyahu survives a general election with a reduced majority. Israel's finance minister joins me live from New York. QUEST MEANS BUSINESS, we're live in Switzerland tonight. Good evening.
(COMMERCIAL BREAK)
QUEST: Welcome back to QUEST MEANS BUSINESS. We're live tonight in Zurich. So, Israel's coalition government is now being put together in Jerusalem, and at the moment, of course, it is touch and go who will be in which position. Indeed, the full coalition government, it's not known what it will look like.
Joining me now is Israel's finance minister from our New York studio. Minister -- from New York. Minister -- Mr. Steinitz, as we look at the coalition government that's being put together, when do you think we will see what the complexion looks like?
YUVAL STEINITZ, ISRAELI MINISTER OF FINANCE: Well, first one thing is clear, even crystal clear, and this is that Benjamin Netanyahu is going to have four more years.
And since he's the only candidate, the only possible prime minister, this makes things slightly more simple, and therefore, I believe that it will take a few weeks' time, one month's time, and we shall see a new government and Jerusalem.
It's too early to predict about the -- accurate components, but one thing is certain: Benjamin Netanyahu is going to remain Israel's prime minister, and this is what really matters.
QUEST: Do you expect to remain finance minister, or will that job go to somebody from the new coalition?
STEINITZ: Well, this is a difficult question. I cannot know. It's quite probably that I'll stay finance minister, but it's also possible that it will be discussed in the coalition -- in the negotiation. So, I don't want to predict anything about the new government and coalition. As I said before, one thing is certain and important, the prime minister's identity is already known.
QUEST: You introduced the two-year budget. Now, the biannual budget at a time when, for example, the United States has been running on a budget -- or without a budget -- for years. Why does a two-year budget, briefly, give you better budgetary control?
STEINITZ: Look, Richard, there are two reasons why I introduced the biannual two-years budget already in 2000 to begin in 2009, 2010. And then again 2011, 12, and I believe we are going to do it now for the tail type.
One is because of the crisis. This was part of our counter-crisis policy, and it says to do without effort, to keep the economic figures of Israel in good shape in order to encourage dramatic increase in investment in the real economy and direct investments in Israel, which we did quite successfully.
But more important still, it is my belief that one-year budget is the most -- is an extremely irrational way of handling a country economy in the modern area. In one new budget, actually --
QUEST: OK.
STEINITZ: -- you focus at least for six months -- hello? Richard?
QUEST: Yes -- no, we're still with you. We're still -- yes, no, we're still with you, Minister, we're still with you. I just needed to ask you finally, Minister, the news out of Israel tonight concerning the former prime minister Ariel Sharon, responding much better than people had expected in his comatose state. What do you make of that? What's been the reaction that you can tell in Israel?
STEINITZ: I heard the news and I hope -- we all hope to see the recovery of Sharon. I understand it's too early to say, but I heard that there are some positive signs, that he has some consciousness, and of course we are happy about anything positive.
QUEST: Minister, we thank you tonight, joining us from -- New York. We will, of course, be watching the results of the coalition and, of course, if and when you are still in government and -- we'll have longer to talk and we look forward to having you on the program again. Mr. Steinitz joining me from New York, live in Davos.
Normally at this time we have a Currency Conundrum for you. Tonight, we have a Commodity Conundrum instead. It has to be, of course, concerning one of the products of the area. Zurich is the world's largest gold- trading center. But there is an unusual place you can store that gold.
If you choose to invest gold, is it A, under a museum? B, under a train station? Or C, under an airport? If you want to store gold, under a museum, under a train station, under an airport? We'll have the answer for you later in the program.
The price of gold is down by just over $4. That's the price at this hour. That's the price, this is the break.
(END VIDEOTAPE)
QUEST: Welcome back, good evening. QUEST MEANS BUSINESS. We are live in Zurich tonight. As well as a beautiful place to live, it's also a financial powerhouse. It drives the Swiss economy forward.
Now, if you walk around here, you'll find a fifth of the workers are either in finance or insurance, according to a recent survey. It's also known for it's growing biotech, automotive, and aerospace industries.
And it came second in the quality of life table, from the consulting firm Mercer, which we always quote each year. And it case you're interested, Vienna was number one. And in case you were concerned, Baghdad was the bottom of the list. I'm joined now by the mayor of Zurich, Corine Mauch. Madame Mayor, good to see you.
CORINE MAUCH, MAYOR OF ZURICH: Pleased to meet you.
QUEST: Nice to -- thank you for allowing us to take over this part of your city.
MAUCH: You're very welcome to Zurich.
QUEST: Zurich as a city stands for what, in your view?
MAUCH: I think Zurich stands most of all for a large variety of issues. In culture, we have a large variety of offers. We have very strong university and education sector. We have a beautiful river, we have churches --
QUEST: I have a confession to make. I couldn't remember the name of the river.
MAUCH: It was Limmat.
QUEST: Limmat.
MAUCH: And you can swim in it. It has drinking water quality.
QUEST: Not tonight we're not going to.
(LAUGHTER)
QUEST: But it's a very expensive place. The one thing I have discovered on my time in Zurich is I spend a great deal of time at the ATM machine taking money out.
MAUCH: That's possible, because we are also the highest purchasing power place in all the world, so this goes together.
QUEST: That's a double-edged sword for you, isn't it? Because you have to attract people in. You don't want everybody living out there, do you? You need people, you need the city generated, and you don't just want, frankly, rich bankers.
MAUCH: We have a very mixed population, and this is also an aim of the city council. We are investing also in this mixed population. And for us at the moment, it is not difficult at all. People want to come to Zurich. Zurich is a growing city. Every year, thousands of people move to Zurich, come here.
QUEST: So, what's your challenge here, then, as you look forward? To try and keep the livability with the cost of living and balance the industries? Madame Mayor, what's your challenge?
MAUCH: I think one of the most important challenges at the moment is related to the issues you are treating. We are a very strong financial center in Switzerland. We are the biggest financial center in Switzerland.
And the finance crisis, the economic crisis, has affected us, of course, very hard. But -- so we are really -- have to look how do we have an economic basis in the future. And until now, we have done it very well.
QUEST: So, that's balancing it out. And also, I suppose to your tourism and things, you have to restore the reputational name, don't you? You --
(CROSSTALK)
MAUCH: Well, I think worldwide, Zurich has a very good reputation. We have many tourists coming here. We have perfect offers in public transportation --
QUEST: Oh, tram!
MAUCH: -- as you can see over there.
QUEST: The tram!
(LAUGHTER)
QUEST: We've been talking about trams all day.
MAUCH: A perfect environmental quality --
QUEST: I think I might owe you some money.
MAUCH: -- very many offers.
QUEST: I think got to the tram and didn't pay. So, I think I might owe you some money for a tram. Finally, if I come back in the summer, you told me I can swim in that?
MAUCH: You can also swim in the lake.
QUEST: And you'll come swimming with me?
MAUCH: It has drinking water -- I will come swimming with you.
QUEST: You'll come swimming with me?
MAUCH: Yes.
QUEST: It's a bet.
MAUCH: Promise.
QUEST: Thank you very much.
MAUCH: Thank you.
QUEST: Well, that will have the viewers watching before the end of the year, won't it? In the summer, swimming with the mayor in Zurich, in the lake.
Live in one of the seats of global banking. After the break, the head of one of Europe's biggest banks, Societe Generale, explains his number one priority.
(BEGIN VIDEO CLIP)
FREDERIC OUDEA, CEO, SOCIETE GENERALE: What we need is the confidence of the public opinion. The confidence of the governments, the confidence of the regulators. That's what is the most important target for us.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN. On this network, the news always comes first.
Queen Beatrix of the Netherlands has announced she is to abdicate and hand the throne to her son, Prince Willem-Alexander. CNN's royal correspondent, Max Foster, is at CNN London and joins me now.
Was this a surprise, Max?
MAX FOSTER, CNN HOST: It was a surprise, but not a shock. They weren't expecting the news now. But abdications do happen in the Netherlands. The previous two monarchs both abdicated, so it is a tradition there. But nevertheless, we didn't know this news was coming right now.
When it did come, the nation was glued to their screens, as there was a national address conducted by the queen. This is one of the things she had to say about why she was stepping down on the 30th of April.
(BEGIN VIDEO CLIP)
QUEEN BEATRIZ, THE NETHERLANDS (through translator): I am not stepping down because the role would become too difficult. But because I feel that the responsibility of this land should like in the hands of a new generation.
(END VIDEO CLIP)
FOSTER: This was the queen, very, very popular, Richard. But she's had her traumas late, and most notably her second son, Prince Friso, still in a coma after a skiing accident last year, her first son, the Prince of Orange, will become king at the end of April, but this is what the prime minister had to say about what he described as an icon to the Netherlands.
(BEGIN VIDEO CLIP)
MARK RUTTE, DUTCH PRIME MINISTER (through translator): She took her role extremely seriously, even in challenging times, such as the difficult years through which she supported Prince Claus and the terrible accident of her son, Prince Friso.
(END VIDEO CLIP)
FOSTER: Prince Friso, Richard, still in a coma here in London -- or hospital, actually.
QUEST: Max, how will this have been greeted in the Netherlands, much love, a monarch who has served her people well?
FOSTER: Much loved indeed, the most popular monarch, if you look at her approval ratings across Europe. She's one of three long-serving queens as well, if you think about Queen Elizabeth of the U.K. and also Queen Margrethe of Denmark, all three of them. They're very close. They speak to each other and they've been immensely popular over their monarchies and are particularly popular right now.
So they all have sons who are going to take over as kings and a lot of pressure on them now, Richard, to live up to their mothers.
QUEST: Max Foster at CNN in London, on the abdication of the Netherlands queen. Now more from QUEST MEANS BUSINESS.
(MUSIC PLAYING)
QUEST: Good evening from Zurich, where the program tonight comes and we are talking about the banking industry, following on, of course, from what we saw in Davos. And now we are looking at the future.
The head of Societe Generale says he one top priority and that is to win the confidence of regulators, governments and not least by any means the general public. I asked him in Davos how difficult it was to keep up standards in the world of modern banking.
(BEGIN VIDEO CLIP)
FREDERIC OUDEA, CEO, SOCIETE GENERALE: You know, when you have 160,000 people in 80 countries, it's a permanent fight to ensure that these people work in the way you want. But will work I'm pretty sure and that's more for the global security is that you still see the results, the consequences of (inaudible) in 2005, 2006, 2007.
A lot of emphasis has been put on ethics, culture and certainly in my bank. And myself, I try to be aligned with these behaviors. So I'm very positive on the current trend. And I think the results show that.
QUEST: You've been in banking some years.
OUDEA: Close to 20 years, yes.
QUEST: So when you read of other banks and your own the scandals, the LIBOR, the sanctions busting, the money laundering, whatever it might be, what did you feel inside when you read the gravity of what you saw had been happening elsewhere?
OUDEA: You know, everything which happens in any bank for us is bad news because, again, it feeds this issue of confidence.
QUEST: But were you disgusted by what you saw and heard?
OUDEA: Yes, because you know when you see practices which, for the clients, are bad, for -- in terms of ethical (ph) bank, yes, of course, we condemn, as we've said, ourselves. We suffered from behaviors which were all bad.
But again, what is important is to understand also what we can do to maintain that at the end of the day, because we need to be -- to understand sort of the complexity of, again, managing a company which is so large.
And as I've said, we work -- we work on culture. We work on values. We ensure that if there is bad behavior, there is an etiquette sanction. It's my role to try to permanently daily feed that culture to the people.
QUEST: It's a difficult task, isn't it?
OUDEA: It's very difficult. I think we should not be naive. It's difficult in any industry. It's difficult, of course, in the financial sector, because you have a lot of money and so what I'm just saying is that we, as bankers, we want to avoid the next problem.
I mean, what happened in the crisis, what we need is the confidence of the perfect opinion, we -- the confidence of the government, the confidence of the regulators. That's what is the most important target for us.
(END VIDEO CLIP)
QUEST: The chief executive of Societe Generale, talking to me in Davos. Now the -- one of the course the reasons we're here and talking about banking, as if to prove the point and the significance, two European banking controversies which began in the early days of the crisis are still playing out today.
A European court says Iceland will not have to pay back the British and Dutch governments over the failure of Icesave Bank. The European free trade, the EFTA Association ruled the government did not have to compensate deposit holders who lost money during the crisis. Last week in Davos, Iceland's president told me he stands by his handling of the situation.
(BEGIN VIDEO CLIP)
OLAFUR RAGNAR GRIMSSON, PRESIDENT, ICELAND: The core message from the Icelandic experience is that unless you win all the people at every level, unless you engaged every community, even down to the local villages and farms and you can galvanize your civil society in supporting the necessity actions and the needed policies, you're not going to succeed.
(END VIDEO CLIP)
QUEST: Meanwhile in Italy, the prime minister, Mario Monti, has given another vote of confidence in the Bank of Italy over its handling of the crisis at Monte dei Paschi.
The central bank has been criticized for failing to monitor trades which push MPS towards a bailout back when the ECB president, Mario Draghi, was the Bank of Italy governor. Now his successor in Rome, Ignazio Visco, said the Bank of Italy was still monitoring things closely.
(BEGIN VIDEO CLIP)
IGNAZIO VISCO, GOVERNOR, BANK OF ITALY: We are following the process, (inaudible) management changed. The management's changed also because of these difficulties in understanding how they were managing their bank.
QUEST: Is it your gut feeling that there may be irregularities?
VISCO: Oh, yes. There is -- there are irregularities for sure. And these have to be a certain and (inaudible) sanctioned (ph).
(END VIDEO CLIP)
QUEST: That's the Italian governor of the Bank of Italy, who was talking to me in Davos last week.
The euro markets are closed -- I was going to say open during business there in New York. They're closed and Germany's Xetra DAX looking at the numbers. Banks were the best performing stocks in Europe. All of them were up except for the DAX, the best going -- well, there are -- it was hardly an -- hardly an exciting day on the markets.
Here in Zurich there were gains for UBS and Julius Baer (ph), who should (inaudible) probably have a round of applause.
QUEST MEANS BUSINESS, live in Zurich. We're back in a moment. Good evening.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
(BEGIN VIDEO CLIP)
QUEST (voice-over): Time for the answer to tonight's "Commodity Conundrum," we asked you for the location of an underground gold storage center in Zurich. And the answer is -- under an airport. As you might imagine, it's advertised as being one of the safest places on Earth. And I can assure you they've not let me anywhere near it. All I've got left, of course, is a bit of old Swiss chocolate.
(END VIDEO CLIP)
QUEST: Now one of the foods that you inevitably are going to eat at some point -- and it ain't cheap, I ought to tell you, when you're visiting Switzerland, is fondue. This, of course, is fondue. It is usually made of an amalgam of cheeses, different types, usually local. So it's all about making sure that you have the right things.
Now you all know what fondue is. You don't need to be a rocket scientist to tell you, you put something on it. You put a piece of bread on the sticks. According to my cameraman, it stinks. But here are the fon- don'ts, all right? The fon-don'ts. Never mind the fon-dos. What don't you do?
You don't double dip. So you don't put it in, eat some, and then go back again for another bit. That is considered to be really bad form.
Provide guests with two forks, one for dipping and one for eating, although I'm not quite sure how you're supposed to do it
Don't drop your food in the pot. And if you do, don't have a scout 'round to try and get it out again.
Do eat the toasted crust on the bottom. The Swiss call it la reli something or other, which I cannot pronounce, because if I try and do that, it'll all go horribly wrong.
And the most important thing: don't have fondue if you're ill and risk passing germs in the communal pot.
It all sounds so straightforward, doesn't it? The smell is really quite overpowering on this particular fondue, delightful, though it is.
If you would like to join in the conversation about anything we're doing on the program, it is @RichardQuest. That's where you can maybe give me your own fondue moments. That should make an interesting bit of reading.
Now while I break all those rules -- oh, dear, I think I've dropped everything in there -- a fresh crop of BlackBerries. Never mind Swiss cheese -- is heading our way. We'll see if they'll be sweet enough to keep Research in Motion in the mobile market. Remember, fondue is also very hot.
Mmm. Mmm. That's quite good.
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QUEST: I've got another don't. Don't eat fondue in a hurry.
Not only do you risk not being able to finish the thing, you'll burn your mouth in the process.
Now shares in BlackBerry maker, the Research in Motion, are down by more than 8 percent on the Nasdaq. The company's set to launch its long-delayed BlackBerry 10 phones later this week, widely seen as RIM's last chance to stay in the game. CNN's Maggie Lake is in New York.
They went up on the prospect. They're going down on the reality. What's going on, Maggie Lake?
MAGGIE LAKE, CNN CORRESPONDENT: That is true, Richard. They are down. But listen, they rallied some 150 percent since the fall in anticipation of this phone, BlackBerry not taking any chances -- or actually taking out an ad for the Super Bowl, which goes for a cool $4 million for a 30-second spot minimum.
This is the first time they've ever done it. And they are really conscious of the fact that they need to woo back those consumers who left.
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UNIDENTIFIED MALE: So, am I seeing you later at our other secret place?
LAKE (voice-over): Research in Motion markets it as the smartphone of love. After years of missteps, RIM needs to rekindle the passion for its new BlackBerry 10.
THORSTEN HEINS, CEO, RIM: The BlackBerry 10, we are at the start of a new era of mobile computing.
LAKE (voice-over): The BlackBerry used to be the main squeeze for millions of smartphone suitors, including this uber-user, who said four years ago:
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm still clinging to my BlackBerry. They're going to pry it out of my hands.
LAKE (voice-over): But as spoofed in this YouTube video:
UNIDENTIFIED MALE: I've been thinking about a new phone (inaudible). You're just too slow. You never do anything I want you to do.
LAKE (voice-over): The relationship cooled as sexier phones beckoned.
PETER PACHAL, MASHABLE: It's really like breaking up with someone you -- when you break up with a mobile device or a mobile platform. And you need to commit to another one.
LAKE (voice-over): BlackBerry sales have plunged 47 percent with 1 million subscribers dumping the device.
KRISTIE LU STOUT, CNN ANCHOR: (Inaudible) says Yahoo! will discontinue the use of BlackBerries.
LAKE (voice-over): High-profile splits with companies like Yahoo! and U.S. government agencies made headlines last year.
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LAKE (voice-over): And BlackBerry's executive rockers released this video to keep app developers on board. Many called the effort "cringe inducing."
But all will be forgiven if the 10 catches on.
PACHAL: It's been delayed numerous times because I believe RIM really wants to get this right.
UNIDENTIFIED MALE: With a simple swipe up and over to the right --
LAKE (voice-over): The 10 is getting high marks for its innovative touchscreen.
PETER MISEK, JEFFERIES AND CO.: It's quite thin; it looks a lot like an iPhone but just a bigger screen. And it's very fast.
LAKE (voice-over): The first models won't come with BlackBerry's beloved keyboard. But never fear.
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LAKE (voice-over): RIM says more than 1,600 corporate customers are ready to give the 10 a shot. And the top four U.S. phone carriers have signed on to provide service. That's gives the 10 a leg up compared to Microsoft's new lineup of Windows phones.
It remains to be seen whether BlackBerry can become a crucial third player behind Apple and Android. But without the success of the 10, some say the very future of RIM is in question.
One thing is certain:
UNIDENTIFIED FEMALE: You didn't have a BlackBerry. It was a deal-breaker for me.
LAKE (voice-over): With the new 10, Research in Motion is trying to bring sexy back to BlackBerry.
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LAKE: Certainly makes you wonder what that Super Bowl ad is going to look like. But listen, one thing is clear, Richard, they need this to do well right out of the gate. Time is of the essence for RIM, Richard.
QUEST: Now, Maggie, BlackBerry and its 10 will be one thing. What's this with the app Vine, which I believe might be on the salacious side, so be careful; we are family viewing.
LAKE: That's right. Now for work viewing is something that is at issue here. So Vine is this app that Twitter released about a week ago to a lot of buzz. It's basically a sort of little six-second spurt of video. Think about what they did with text as sort of a mini-mini little YouTube.
Unfortunately, though, pretty soon after that -- the release happened, some porn started filtering onto that, unfortunately, from some viewers. This is one of the headlines.
"Is Twitter the New Microporn Site?" Not what the company wants to see. In fact, one of those little videos made it onto the editor's picks somehow. Twitter right away put out a message, saying, listen, that was due to human error. They apologized, removed it immediately. But it does sort of bring up this challenge of some of these new photo sharing or photo sites.
Apple very strict policy about this. They've already taken a couple of sites off of there, off their app store, including 500PX and Vidi. They've removed those apps; remains to be seen whether they're going to do it to the Twitter app because of this. And of course, that would be a big blow to the launch, Richard.
QUEST: Maggie, interesting stuff. I've always been worried about the unintended sync from your PDA or computer or whatever to (inaudible).
We'll talk about that in the future, the unintended sync.
Maggie Lake in New York. Stocks on Wall Street are off to a slow start. That's the market that's open and doing business. We are hardly going to spend a moment talking about it. The Dow is just in the red.
Caterpillar the best performer, up nearly 2 percent after its earnings beat expectations. The market up just 8 points. Yahoo!'s figures comes later after the markets close. It's going to be a big week for economic data. The Fed meets on Tuesday. Monthly employment's numbers on Friday.
Boeing shares continue to feel the effect of the Dreamliner crisis, down around 1 percent. Hopes that the company's 787s will be back in the air have been dashed. U.S. and Japanese regulators admit they haven't been able to pin down the cause of a series of technical errors. The NTSB and the Japanese Transport Ministry say no anomalies have been found in the Dreamliner's main batteries.
That, of course, means a problem. If there's no anomalies, it could be structural; if it's structural or systematic, that means redesigning. That means it's more expensive. Shares in G.S. Yesua (ph), the Japanese company which makes the batteries, dumped nearly 5 percent in Tokyo.
Now when you are in Switzerland, when you're in Switzerland or in this part of the world, atop a mountain, you do expect to see snow. And clearly, it's a clear night in Zurich and there is no snow. There is no snow.
There is -- ah! When in doubt, here comes the snow. Hey, I said snow, not a blizzard.
As you can see, you can always get snow one way or another.
Tom Sater is at the World Weather Center.
TOM SATER, AMS METEOROLOGIST: Good thing you didn't call for rain, Richard, although that is in your forecast, a few scattered showers tomorrow but a delightful evening in Zurich. Enjoy your fondue; it looks fantastic. You're just above freezing at 1 degree and I'm not sure of your plans, Richard, but you may want to hang around for a while. Look at the colors, the warmth moving eastward.
London, your average is 7. You're getting up into double digits here Wednesday and Thursday. And in Zurich, look at this, 13 degrees. The average is 2. That does come with a few scattered showers Tuesday, but I think clear skies, plenty of sunshine for Wednesday and Thursday.
And Berlin, it was about a week ago, or just over a week ago, that we mentioned, you know, Berlin could go a stretch of 16 days without hitting the freezing mark. Well, congratulations. You're now above freezing. And it was 16 days, by the way.
Hopefully, this warm trend will continue for a while. What a surge of moisture, though, across areas of the U.K. We have a warm front; ahead of this warm front, we had the snow, because the warm air was pushing up over the cold air. Snow is changing to freezing rain, then changing to rain and now comes the warmth.
But this area of low pressure in the North Atlantic, this is Iceland. They're going to see upwards to maybe a meter of snowfall. But the rain is moving out. There will be a few spells of some rainfall in parts of the north. The winds right now are pretty strong. So it's a give-and-take here. We've got to put up with some strong winds for a while.
But the winds and the arrows pointing from the southwest, so the warmth will be on the way. Just going to be a little breezy for some. And then it looks like most of the moisture will move into parts of Scandinavia.
And we're going to have blast and some snowfall that'll be falling here as well, at least the temperatures will get a little bit better south of Scandinavia. It may not make it Belarus. But at least the snow has come to an end. Enjoy it -- it's going to be quite nice for you, Richard, in Zurich. Enjoy the evening; just a little patchy fog later.
QUEST: Indeed it is, the snow seems to have come to an end. Ha, ha, (inaudible). No, there we go. Look, it's all blowing in the wrong direction now. Everybody getting absolutely covered.
We will have a "Profitable Moment" after the break.
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QUEST: Tonight's "Profitable Moment," if Britain has been called a nation of shopkeepers, Switzerland is the nation of bankers, both here and Zurich and last week in Davos, all the talk is of how the industry can reform itself, pull the global economy up by the bootstraps. There is one unhelpful fly in the ointment, bankers all around the world are still being bashed as much as ever.
Yes, they played their part in creating the crisis. And there are some who have got away with wrongdoing for too long. At some point, though, we have to let them make amends. The banks have changed and are still changing.
And the sooner we stop whining and joining the discussion the faster we can expect to see meaningful, effective reforms, love 'em or hate 'em, when it comes to the banks, we cannot escape without them. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Zurich. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you in London tomorrow.
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QUEST (voice-over): In the Netherlands, Queen Beatrix is set to abdicate the throne after a 34-year reign. She announced a short time ago that she will step down in April in favor of her 45-year-old, Willem-Alexander. He will be the first Dutch king since 1890.
Reports say that police have arrested three people in connection with the deadly weekend night club fire in Brazil, one of the owners of the Kiss night club and two members of the band that was playing there. Meanwhile, funerals are being held for the 231 people who died in the blaze.
More rage in the streets of Egypt, including the capital, where clashes killed at least one person on Monday. Three cities along the Suez Canal are now under emergency law. Protesters have been lashing out at President Morsi since last Friday, saying he's hijacked the revolution they fought for two years ago.
French forces and Malian troops have taken control of Timbuktu. A hero's welcome from residents of the fabled desert city before they (inaudible) set fire to a building housing some of the famed Timbuktu manuscripts.
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QUEST: Those are the news headlines. Now from Zurich, live to New York, "AMANPOUR" is next.
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