Vaud Bank Has SFr400m 2001 Loss

by Ulrika Lomas, Tax-News.com, Brussels

20 March 2002

The cantonal bank of Vaud (BCV) has reported a net loss of SFr381 million ($229.24 million) for 2001 and is considering cutting 220 jobs. The loss had been predicted last December when the bank said it would have to write off SFr1.7bn in non-performing loans.

At the time the bank said it would raise SFr600m in new capital in 2002, with the support of the Cantonal government, which owns more than 50% of its equity, in order to repair its balance sheet, but yesterday the board said it would propose at the annual shareholders’ meeting on May 23 that the SFr381 million loss be covered by a transfer of SFr390 million from capital reserves.

In a statement commenting on the 2001 results, BCV said that depreciation, value adjustments, provisions and losses totalled SFr1.33 billion as a consequence of the measures taken to strengthen credit risk provisions.

BCV's problems began when it was forced to shoulder the SFr3.5 bn liabilities of insolvent Banque Vaudoise de Crédit in 1993, and, says the bank, have been exacerbated by severe anti-trust measures imposed by the Federal Competition Commission in 1989 and by the general economic downturn, which required the Swiss banking system to generate provisions in excess of SFr90 billion between 1991 and 2000.

BCV said its goal for this year was to improve gross profit by 10 - 15% over the 2001 figure of SFr330 million and said it aimed to cut costs by an annual SFr40 million by 2005. The bank said that one of the measures under consideration was a general reduction of staff by ten per cent, but that if it happened this would take place through normal staff attrition.

Although the bank has made forays into private banking in recent years, its primary role has been to support the local economy, and there must be worries that it has been unduly influenced by its political masters in making loans to support firms in trouble. 85% of its lending is concentrated in Vaud.

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