Insight

Too Good to Fail

Sandro Abegglen discusses new regulations after financial crises, corruption, and more.

An Interview With Niederer Kraft Frey
Best Lawyers

Best Lawyers

March 30, 2020 08:00 AM

This interview was conducted as part of the 2020 Edition of The Best Lawyers in Switzerland “Law Firm of the Year” award recognitions. Our partner Handelsblatt, also published these awards on June 27, 2019, online and in print in their June 2019 edition.

More than a decade later, the scars of the global financial crisis continue to disfigure and complicate the balance sheets of some of the world’s most prominent financial institutions. Helping them heal—and guard against future injury—is Zurich-based Niederer Kraft Frey, recently named Banking and Finance “Law Firm of the Year” in Switzerland. NKF partner Sandro Abegglen—whose bailiwick encompasses banking, finance, regulatory, investigations, enforcement, white-collar crime, and investment funds—sat down with Best Lawyers CEO Phillip Greer to discuss tightened regulations, corruption risks, and why it pays to be wary of sovereign-wealth funds.

What does it mean for you and the firm to be named Banking and Finance Law Firm of the Year by your peers?

Sandro Abegglen: We’re very honored. We believe that for banking, finance, and financial-services regulatory, we’re second to none in Switzerland. But of course, it’s a daily fight to keep that position, and rewards such as this help make that clear to our clients.

There has been a great deal of focus on banking and financial institutions in the wake of various crises over the decades. How have regulations affected your clients, and how confident are they should another crisis arise?

They have massively affected the big financial institutions and banks in Switzerland—UBS, Credit Suisse, CRH, Cantonal Bank, and Raiffeisen Group, which were considered too big to fail. As a consequence of that categorization, these banks are still working to increase their capital buffers and implement substantial measures to ensure that in case of a problem, the core element could continue to work and that the other pieces could be broken away.

That’s a super-complex task, of course, for Credit Suisse and UBS. The vast majority of their operations and capital and risks are abroad. In London or in New York, where these operations are, regulators might have a different view. In addition, the increase in capital requirements has brought those banks’ share prices under pressure. I’m not a financial analyst, but it’s clear that some shareholders wonder whether there is still enough for them on the plate.

The second area is more low-level but very hot at the moment. As a consequence of the financial crisis, a large number of retail clients lost money. Point-of-sale-related financial services in Switzerland were put under scrutiny, and as a result, there’s a new law coming into force January 1, the Financial Services Act, which will introduce point-of-sale conduct duties that apply to any financial services provider in any area. I’m happy that my team and I advise UBS on the implementation of the Financial Services Act. UBS is the largest wealth manager in the world. [Consider] how much work that that involves. On the operative side, the IT side, it also costs a lot of money.

A third area: The increased attention paid to the problem that a number of European Union, United Kingdom, but unfortunately also Swiss banks, are often involved in catering banking services to clients involved in corruption. There are famous cases, like 1MDB, where even Goldman Sachs is involved. But all these scandals that involved money from corruption, some of that money was also poached in Switzerland with some private banks.

That has a substantial impact on the profitability of the business. Meaning that today, a bank is much more likely to turn away the client from Mexico or Argentina, not to speak of Venezuela or Azerbaijan—or clients from Russia or Saudi Arabia. Today you must have much faster doubt about the legality of the funds. Some of these clients, even if they are state funds—1MDB was a state fund—they’re bringing [the problem] to you.

Because the Swiss banks in the wealth-management area are so globally active, they have clients all over the world—including in countries I would not dare vacation with my kids. Like Venezuela: If you have a rich entrepreneur from Venezuela, the chance is that such a guy has to be involved a bit in corruption. Otherwise, you probably cannot be an entrepreneur in Venezuela. The chance is much bigger than when you cater to a dentist in London.

How do global trade wars, tariffs, and protectionism affect your clients? How do you best prepare them for certain outside influences?

Inbound cross-border services provided in the European Union are very protective, politically driven. The European Union tries to shut down the market with regulatory measures against foreign financial institutions. Providing services into those countries from outside the European Union is also a big topic for U.K. banks. We can tell them to lobby with the Swiss government, that the Swiss government tries to obtain better conditions. But their leverage in Switzerland is, of course, limited.

On the other hand, in cooperation with international law firms in Germany, etc., we tell them what they have to do to be able to provide cross-border services under this stricter practice. The fact of that ever-increasing regulatory regime means it’s only possible to cater to clients who are taxed. The rich German entrepreneur who should now bring his taxed money to a Swiss bank: Does the guy still come when he has to do it with taxed money?

Maybe it has the effect that you lose some market share in these markets. The bigger banks can make up for that by setting up operations locally in Germany. But for the smaller ones, that’s not an option. Where do the smaller ones turn? They go to a market where that regulation is not that strict. It’s exaggerated, but then you go to Latin America, you go to Southeast Asia, you go to Africa, you go to some Arab countries. But these are all markets with substantially increased risks from corruption.

Are there any projects or upcoming work you’re particularly excited about?

Very exciting for me is that we appealed against the decree of the Swiss regulator who wanted to disgorge profits a bank made with illegal transactions. Simplified, FINMA [the Swiss Financial Market supervisory body] took the view that the Swiss bank had to pay substantial expenses and penalties to the [Federal Customs Administration]. That means the expenses could not be deducted from the disgorged profits. We’re taking that case to the Swiss Supreme Court, and there are signs that we could win.

When I look at what’s commercially exciting, it’s licensing mandates. We have a big mandate for Bank of New York Mellon—they’re setting up a much bigger presence in Switzerland, and we’re accompanying them, obtaining the relevant license from FINMA. This is exciting because on the U.S. $10 bill is [Alexander Hamilton], the founder of Bank of New York Mellon, and he also happens to be a founder of the United States. I’m proud that we can [cater to] such international institutions.

This interview has been edited for length and clarity.

Related Articles

Announcing The Best Lawyers in Switzerland™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Switzerland.

Red flag with white cross

Announcing the 2022 Best Lawyers™ in Switzerland


by Best Lawyers

The results include an elite field of top lawyers and firms.

Announcing the 2022 Best Lawyers™ in Switzerl

An Interview With Bougartchev Moyne Associés


by Best Lawyers

France’s 2020 “Law Firm of the Year” honoree in Criminal Defense Law

An Interview With Bougartchev Moyne Associés

An Interview With Latham & Watkins


by Best Lawyers

Germany's 2020 “Law Firm of the Year” honoree in Banking and Finance Law

An Interview With Latham & Watkins

Return the Favor When Bidding


by Denys Myrgorodskiy

Denys Myrgorodskiy, the managing partner of Dynasty Law Firm, looks at the process of withdrawing insolvent banks from the market in Ukraine and its potential consequences.

New Bank Fraud Laws in Ukraine

Q&A with Plinio Pinheiro Guimarães of Pinheiro Guimarães


by Best Lawyers

An interview with Plinio Pinheiro Guimarães of Brazilian "Law Firm of the Year" Pinheiro Guimarães.

Law Firm of the Year Pinheiro Guimarães

The Great Reckoning


by John Ettorre

Eight years after the financial crisis, aftereffects continue to ripple through the financial sector.

The Great Reckoning

Announcing the 2024 Best Lawyers in Switzerland


by Best Lawyers

The results highlight the top lawyers and firms in Switzerland, including the 14th edition of The Best Lawyers in Switzerland™ and the 2024 “Law Firm of the Year” recipients.

Bridge over water with skyline of town in Switzerland and blue sky in background

IN PARTNERSHIP

Patrick A. Mullin, Esq. 2023 Annual Report


by Patrick A. Mullin

Continuing Victories in Criminal Tax & White-Collar Defense.

Headshot of attorney with dark brown hair in navy suit

Announcing The Best Lawyers in Germany™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Germany.

Black, red and yellow stripes

Announcing The Best Lawyers in Austria™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Austria.

Red and white stripes

Announcing The Best Lawyers in Italy™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Italy.

Green, white and red stripes

Announcing the 2022 Best Lawyers in Colombia™


by Best Lawyers

The results include an elite field of top lawyers and firms.

Announcing the 2022 Best Lawyers in Colombia™

Announcing the 2022 Best Lawyers in South Africa™


by Best Lawyers

The results include an elite field of top lawyers and firms.

Announcing 2022 Best Lawyers in South Africa

Announcing the 2022 Best Lawyers™ in Germany


by Best Lawyers

The results include an elite field of top lawyers and firms, including our inaugural Best Lawyers: Ones to Watch recipients.

Announcing the 2022 Best Lawyers™ in Germany

Announcing the 2022 Best Lawyers™ in Austria


by Best Lawyers

The results include an elite field of top lawyers and firms.

Announcing the 2022 Best Lawyers™ in Austria

Trending Articles

Announcing the 2023 The Best Lawyers in America Honorees


by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

Announcing the 2022 Best Lawyers® in the United States


by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

2021 Best Lawyers: The Global Issue


by Best Lawyers

The 2021 Global Issue features top legal talent from the most recent editions of Best Lawyers and Best Lawyers: Ones to Watch worldwide.

2021 Best Lawyers: The Global Issue

The U.S. Best Lawyers Voting Season Is Open


by Best Lawyers

The voting season for the 31st edition of The Best Lawyers in America® and the 5th edition of Best Lawyers: Ones to Watch® in America is officially underway, and we are offering some helpful advice to this year’s voters.

Golden figures of people standing on blue surface connected by white lines

How To Find A Pro Bono Lawyer


by Best Lawyers

Best Lawyers dives into the vital role pro bono lawyers play in ensuring access to justice for all and the transformative impact they have on communities.

Hands joined around a table with phone, paper, pen and glasses

What the Courts Say About Recording in the Classroom


by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

How Palworld Is Testing the Limits of Nintendo’s Legal Power


by Gregory Sirico

Many are calling the new game Palworld “Pokémon GO with guns,” noting the games striking similarities. Experts speculate how Nintendo could take legal action.

Animated figures with guns stand on top of creatures

The Best Lawyers in Australia™ 2024 Launch


by Best Lawyers

Best Lawyers is excited to announce The Best Lawyers in Australia™ for 2023, including the top lawyers and law firms from Australia.

Australian Parliament beside water at sunset

Inflation Escalation


by Ashley S. Wagner

Inflation and rising costs are at the forefront of everyone’s mind as we enter 2023. The current volatile market makes it more important than ever to understand the rent escalation clauses in current and future commercial lease agreements.

Suited figure in front of rising market and inflated balloon

Best Lawyers: Ones to Watch in America for 2023


by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

A Celebration of Excellence: The Best Lawyers in Canada 2024 Awards


by Best Lawyers

As we embark on the 18th edition of The Best Lawyers in Canada™, we are excited to highlight excellence and top legal talent across the country.

Abstract image of red and white Canada flag in triangles

8 Different Types of Criminal Defenses in Law


by Best Lawyers

Learn about the different types of criminal defenses available in law, including innocence, self-defense, insanity and more. Protect your rights today.

Silver handcuffs laying on finger printed papers

Wage and Overtime Laws for Truck Drivers


by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

The Upcycle Conundrum


by Karen Kreider Gaunt

Laudable or litigious? What you need to know about potential copyright and trademark infringement when repurposing products.

Repurposed Products and Copyright Infringemen

Choosing a Title Company: What a Seller Should Expect


by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

The 2024 Best Lawyers in Spain™


by Best Lawyers

Best Lawyers is honored to announce the 16th edition of The Best Lawyers in Spain™ and the third edition of Best Lawyers: Ones to Watch in Spain™ for 2024.

Tall buildings and rushing traffic against clouds and sun in sky