UBS AG (UBSN) and Credit Suisse Group AG (CSGN), Switzerland’s largest banks, were dropped from Bank Sarasin & Cie. AG’s “sustainable funds” because of “compliance problems” on tax and trading matters.
“UBS is struggling with persistent compliance problems, raising many questions with regard to incentive mechanisms and internal controls,” Basel, Switzerland-based Sarasin said in a report today. “Credit Suisse had already been on permanent watch by our sustainability research team for some time in view of its borderline rating.”
Sarasin favors lenders that pose little systemic risk to the wider economy and those with strong records on compliance as it assesses stocks that can be chosen by managers of its 2.7 billion Swiss francs ($2.89 billion) of sustainable funds. Sarasin sold the last shares of UBS and Credit Suisse from its sustainable portfolios on Nov. 3, according to Klaus Kaempf, an analyst at the firm’s asset-management unit.
Environmental criteria, such as the financing of renewable energies and sustainable asset management, have a 30 percent weighting in Sarasin’s bank sustainability ratings. Social criteria, including business conduct, systemic risk and corporate governance, comprise the rest of the rating.
Both UBS and Credit Suisse have assets that are more than double Swiss gross domestic product, according to Sarasin, which still rates the Swiss banks above JPMorgan Chase & Co. and Bank of America Corp. in terms of sustainability.
“The few institutions that have outstanding sustainability ratings come mainly from northern Europe and Canada and are characterized by solidity, client-oriented business models and transparency,” according to the report from the 170-year-old Swiss wealth manager. “They came through the financial crisis relatively unscathed.”
Sarasin’s index of sustainable banks had a negative return of almost 35 percent in the five years through October compared with a negative return of 47 percent at the MSCI World Bank Index (MXWO0BK) over the same period.
Safra Group, founded in the Syrian city of Aleppo in the 19th century, agreed last month to acquire Dutch firm Rabobank Groep’s controlling stake in Sarasin, which had 17.2 billion francs of investment fund assets at the end of June.
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