 Probably there are people coming directly from banks. Is that correct? How many? Good. Do we have external asset managers? A few. Excellent. Others would be lawyers. Or what type of, yes? Now the types of activities. Very good. So yes, this is a subject that is influencing our lives. Here is the current situation. First of all, we had started in 2005, especially with the EU savings directive in banks. It's a change that hasn't been totally integrated yet, the cultural change. Then of course we have heard a lot about data exchange from the OECD. We had the Rubik agreements with initially United Kingdom, Germany and Austria, and Germany backed down in the last minute. But the Rubik is those agreements where the bank is a paying agent, have been implemented. Now we have national changes for many countries at the same time. And of course we have FATCA, which is the US reporting names, the one names. And the agreement with the US Department of Justice, which is actually going to take money from quite a number of banks. Now all this of course amounts to a lot of pressure internally. We are having pressure from FINMA with new regulations. And we have also the Swiss Federal Tax Administration. And I'm quite sure that the first tax inspections for those things are going to come soon. And so this is a lot of pressure. Now we don't need to give you too much of a background about that because I probably think you know. There is something I would like to tell you about this. And this. And this is why European countries, a good reason why European countries are after these changes. Well, it's very simple. The European member states of the EU were in the position of casino addict, meaning that they're gambling, you know, gambling compulsion. And in order to stop that, they first made promises which they didn't keep. And then they went to the European Union and basically asked to some form of introduction. So they say, okay, we need to take some measures so that we don't go over our budgets. And therefore starting 2013, some measures need to be taken and it's a form of self-introduction, if you want. Result is what? The result is called the European Fiscal Compact, entering to force 1st January 2013. And the result is that member states cannot have to rush to find new tax measures. Because if you can't make more debts, then you have to raise, you can have either to cut the cost or raise the taxes. Which means that the 25 member states have gone into a mad rush of improving their financial situation. Not counting the situation of Spain, Greece and so on. Which, however, the European Union has a serious problem. The European Union does not have the majority rule on tax matters. Which means that the meetings of ecofine, which were supposedly there in agreement, are shopping lists. So there is not real will, there is no clear concept. The Commission has a concept, but it's not, we can't say what the European Union wants in terms of taxes. Because the European Union doesn't have the right to want. Because there is unanimity rule, so any country could raise their hand and make a veto. So that's the situation. Anyway, the problem is that they didn't give them clear instructions how to do that. So each one rushes in their own direction and we get what we call tax balcanization. Meaning each country goes with their own rules. So Spain goes with their own rules. France goes with their own rules. And Germany and everyone goes with their own rules. So for the moment, I wouldn't say that we are going toward a single financial market. Actually, we're getting further by the day. Okay, so this is a problem. Hopefully this is going to be a momentary crisis. But for the moment, we are in a situation of tax balcanization. And how does this affect us in Swiss financial place? That we have to answer those new demands, which are new reports. Mainly they are reporting requirements, but can be increases of tax rates and so on. And the problem, what is the result for us? Well, this is the result. I think we tend to go in a form of panic-driven management. Let's face it. You know, the conflict with the U.S., OECD, MIFE2, U.S. Savings Tax, Ruby, KYC regulations, reporting, all these things tend to throw the financial industry into panic mode. So what is it that is happening? Actually, what is happening is a new age. But this is something that we have started ourselves. And that has been a decision taken, and this is a strategic decision for the financial marketplace, which is this. Assets of clients are either fiscalized or will soon be. Period. There's no if and buts. This is the way it's going to be. So basically, if that is the rule, then, of course, it changes the relationship between the clients and the banks, between the banks themselves. This changes a lot of things. And so we will go from a paleotropic age. Trapeza in Greek means the bank. Paleo means the old. So that means the age of old banks. And we will go to a neotropic age where bankers will have to have hard skills. So we go from an older version, which was wearing suits and which was called proto-fiscalensis, which means before taxes, and we have the homo-bankarius after tax. And they will have to, in addition to their soft skills, they will have to develop the hard skills. So the soft skills would be anything which characterizes Swiss banking system in terms of welcoming clients, making them feel comfortable, and giving them this environment that is necessary to conduct proper banking. The question is, between A and B, is there going to be an extinction? So who is going to survive and who is going to die? That's the question. That's a good question. And of course, the question can go directly for any person who works for a financial institution. Am I in the list of the future extinct companies or am I not? And if I survive, what am I going to become? What does this change of functioning, of environment? Do I need to change my strategy and so on? This is the subject of today. So there are two ways to approach the matter. The first way is the traditional macro-economic top-down approach, which I think is pretty much the standard approach which you see most of the time in newspapers, in studies, political-economic studies, which are macro-economic approach. So we look at the international political situation, which I have started to do, start to some degree. And we look at the financial markets. We know, okay, there are the U.S., there are the European Union. And then there is China, because we are looking at Renminbi and the Chinese markets. And we at the Asia, and we look at our model, we see how this impacts Switzerland. And there we have FIMA, the Federal Council, and we'll see how this will impact the banks. Kind of a top-down approach. There is a second approach. Before I introduce it, I will just tell you how I tend to work with my banks. This will also tell you a little with my clients. The ideas is that, of course, I provide consulting, strategic, and operational, which also leads to operational audit and training. Training has become a massively important thing, because, for example, if you want to train staff on the rules of Rubik, it's a lot of work. I think to train properly somebody, I think it would take at least a week with exercises, which I do. This is the time for training. Depending on the specialty, of course, some people would need more, and some people would need less, with exercises and everything. Now, we can have the back office with all the calculations. And, of course, we have the front office, because why is it important? Because we need to do asset allocation and analysis. Before, in order to do that, we need to know the impact. It's like, this is driving the car, this is repairing the car, or affecting the maintenance of the car. There are two types of different types of knowledge and competence. Of course, there isn't coaching. What do I don't do? I don't do market analysis and investment. That is not my job. I don't do legal advice. I don't do tax advice. I don't do regulatory audit. But you say we're working on operational audit and operational tax. Yes, but that's application. That's not advice. Okay, so we are really in the mechanics of things. This is really the picture I want to give, because this is where banks are heading toward a more industrial approach. And I think this word re-industrialization, I think you're seeing that more and more often in the press. Good. So, the second way to look at problems is as a bottom-up approach. We start from, let's imagine that the financial industry is like the electrical industry. Just for a minute. Bottom, we have infrastructures. We have nuclear reactors. We lack or dams. These are the companies and stock exchanges. We have payment systems. We have security settlement systems. All these infrastructures, some of you probably are familiar with the Swiss value chain. We call the Swiss value chain, which is basically our electrical wiring of the Swiss financial marketplace, which is run by six. But there are other things which participate to that financial infrastructure. On the top of that, we have banks. And each bank is an industrial unit doing a certain type of service and product. They have to provide that service and that service needs to provide enough income and sufficient bottom line so that they stay afloat. And there, of course, tax provides operational constraints. Now, we have another problem that some of you may be more familiar than others. This is upstream taxes. Upstream taxes is like when you invest in France and they take, I'll remember by heart, for dividends. They might take 25% upstream tax. And on top of that or in deduction of that, you need to pay taxes. But there are double taxation treaties and so on. So this is a complex mechanics. So you have one bank, one bank, one bank, one bank, and you have source states with different cases. And of course you have your clients who are living in different places, different countries, beneficial owners. And actually it makes it more complicated because we are thinking about beneficial owners, not account holders. There can be more beneficial owners for a single account or portfolios. So this introduces complexity. So we have these things and we have to look at bank, bank, bank, banks, source states, source states, source states, source states, source states. And we have country, country, country, country, country. And this gives us a picture of all these things. And then we can get a general picture, which is a picture of reality as it is, and not as we would like it to be. And from that picture, which is really, so let's, we forget about the environment or everything. We're looking at ourselves and try to generalize a picture of the Swiss financial marketplace. And what do we find? Well, this is what we find. There are four findings. I'm showing them one by one and then I'm going to go in detail for each of them. First of all, wealth management banks will occupy the same market niche but will change their structure. Meaning, if you, maybe you're wondering what type of business banks will do in the future, I would say essentially the same as before. This is reassuring. But they will change their structure. We'll see that in detail because that is the important part. The second one is whatever the regulatory choices in Switzerland workload will not vary significantly. This is completely counterintuitive. I will explain you why. This is not, that's not what's in the Brunetti report, I'm afraid, but that's the truth. Whatever the regulatory choices in Switzerland workload will not vary significantly. So basically this tells us we should stop worrying about what the federal counseling is going to do next because the work is going to be more or less the same. Then the third one is new procedure will be required in order to access the European fiscalized market. And the trend is to what becoming a paying agent. Okay, so meaning that banks will be tax collectors. It has been the case since 2005 and whatever we say this might be the trend because that's the trend in Europe. Achieving compliance and profitability is a life and death proposition and I think this is the most intuitive one. Okay, so let's go to the first one. Why should clients keep coming to a Swiss bank? I like this one, you know, this is not a Spanish bank. So people start coming. Of course, there is some truth in it, but it's a limited truth. It just means that it's a mess elsewhere in some countries and it's not a mess still in our country. It doesn't tell anything that we are good. Just say that it's a mess elsewhere and we are in a better position than the others. So yes, this is true, but this is not sufficient to characterize a Swiss marketplace. That would be reductionism. Okay, this is true only to some degree. The unique selling proposition of the Swiss marketplace as we propose it is this one. That's the management of multi-market, multi-product and multi-currency assets for clients coming from multiple countries. This is something that other countries don't have. Okay, you can go to Paris, to London. They might have, okay, supposedly, maybe they can make better performance than us. Maybe they have better techniques on some aspects. Maybe they can, all sorts of things. But that, they don't know how to do. Okay, and this is our unique selling proposition in Switzerland. Nobody else knows how to do that. And I'm going to give you an idea. Let's say you want to open an account in France and essentially maybe a client will go to the bank and say, I would like to invest and make maybe a portfolio, an insurance, you know, maybe a life insurance or something, and whatever is required. And they'll say, very good, we have a very large selection of products, 300 products we have. Good. And that's, of course, that's for one kind of client country, that's France. You say, yes, but sorry, I just come from across the, you know, I just took a train from Barcelona and I'm from Spain. Oh, call the manager. Okay, and then it becomes all more complicated because you're supposed to have a French phone to access the account and to provide French documents and so on. So this is simply not geared toward that. So certainly some banks will have some, of course, will have clients, but that's more or less generally the trend. So what does it give in terms of complexity? Let's say it's a complexity of 300. Now let's take a Swiss bank with 7,000 products. That's conservative. If you go into a bank and look at their file of financial products, 7,000 is okay. That's a good one. Of course, not all of them are being used or are being in portfolio right now, but basically they could be so they have to be studied and evaluated. And of course, they have to be evaluated for each country of each client because each client has a different tax regime. So each country would have, so each of these products would have to be evaluated seven times for each, for example, of your seven countries of clients. What's the complexity level? 49,000. So this is an asset, but I would say this is a challenge. If we want to survive with that asset, we need to raise above the challenge of qualifying our product offering for each of the countries. So we have a massive, massive, massive challenge. And which means that we will have to make a due diligence of the taxing back to each product for each country's tax system, which is a multiplication. Good. So that gives you an idea of the level of complexity we are dealing with. And this takes us to what is called, I think UBS has coined the word complex money. I don't like that word because it's what it is. We had easy money in the past. Now we have complex money. And so we need to basically manage that challenge. And now the second point, which is probably the less intuitive one, is the idea that whatever the federal council will decide this will not impact the workload significantly. Why? Because all tax income taxes in all the countries that I know are based on the fact that the citizen at the end of the year is supposed to provide a tax return to the tax authorities. Meaning that the bank, if the bank is holding assets for the clients, and this is a country that is taxing dividends, interests, capital gain, most of them are doing that. Well, you need to provide them the information so that it can prepare the tax return. Now if they didn't declare it in the past, well, that problem didn't exist. But now that problem exists. So every client of every country will require from the bank the necessary information to make the tax return. That's a fact. So, okay, so we can find an alternative system. Let's say we make a new savings tax and make a rubric tax where the bank is a paying agent. Good. Well, the UK or an Austrian client still have to make the tax return. So if they are not declared, if they have not, so they are paying a source of them that don't have to declare the account and they're paying at the marginal rate, you need to do the full reporting and the full calculation. It's a lot of work. Rubic is a lot of work. So you have to do it. Okay, you do a little less work on this side, but you have to do it on this side. But in the end, it's always a report and it's always calculation. So whichever way you go, it's always the same quantity of work. You can't escape that. And what about exchange of information? Exchange of information is just additional. FATCA is additional. It's not about taxation. It's about names. You do exchange of information. What do you want to exchange? Whatever you want to exchange will be in addition to the rest of the work. It will be in addition to your tax reports. It will be in addition to all the rest. So exchange of information, FATCA, that just adds to the workload. Okay, because in the simplest world possible, we would say, okay, all clients declare themselves, we have to provide enough information to each of these clients to make the tax report. But don't forget that the calculation rules are different in each country. So depending on the country, you have to present the same result, the same transaction chain, building the same position in different ways for each of the countries of the client. So there is no escaping the quantity of work. You go this way, you go that way. That's the regulatory paying agent route. That's the direct reporting route. Same thing. This one has more constraints than risks for the bank, by the way. Okay, so that point, I believe, is fairly clear. The third point is that new procedure for accessing European markets. The European Commission has written documents where they say that financial infrastructure are the plumbing of the bank, and they're usually not considered until they don't work anymore. And the European Commission was not going to make that mistake. Which is good, because I believe in Switzerland we are making that mistake. Of considering the financial infrastructures like the custody system, the payment system and so on, like something that is not worthy of our attention. Technical details. The problem is that those technical details is exactly what landed bankers into trouble with the Department of Justice. Because if you send a check for caching in the US, if you send a US caching and you don't think about the payment system, well, it goes, finally, it settles in a US bank. And then they call you. Okay, so if you didn't want them to know that it was a very poor idea not to watch very clearly what happens in the payment system, because FATCA and all the systems are all predicated on the financial infrastructures. That's how they work. That's how they keep us. The good financial infrastructures actually are our best weapons. And we have to be interested in cross-border rules, custodians, payment system, tax services, because they are European tax services. And there is a whole work going on in Europe. And guess what? In those documents, in all business advisory group, they don't talk about the European Union like the press always says. No, they always say EU plus AFTA. They don't even say the EEA, the European Economic Area. No, no, no, they say EU plus AFTA. And why did they say that? Because of little Switzerland. Because we are in the middle. And actually, in their maps of the European financial infrastructures, the systems of six are right in the middle. I mean, you remove the plug on six, I don't know what happens. It's like closing got-out, you know? Nothing happens anymore. So our facilities is like our strategic advantage with the Alps who are right in the heart of Europe. And this is our best card for negotiations. And because for them, I think for the European, the importance of Switzerland is much more clear than the importance of Switzerland for the Swiss. That's a paradox. I think we tend to be in an idea that we are so unimportant. But it's not true. It's not true because we are holding a massive financial infrastructure. And by the way, we are the first creditors of the US in Europe. Which is not too bad. Even in the UK, it's behind us. And so, like take all the banks, the clients and everything, you know, the sovereign credits, like the Swiss Confederation and everything, put everything together, we are holding more, you know, US debt than the UK. Good. So for the technical facts, but I don't have time to cover that in detail, we have three levels. We have the level of the financial product, which is custodian and the country. So where is it deposited? What are the rules in that country? We have the level of the bank in Switzerland. So we will have upstream tax. And then we have the level of downstream, which is the level of the client. So this is very technical. And we have all these rules. But since we might have some upstream taxes we have the double taxation treaty between UK and Spain. So we have to think, not about the double taxation of treaties between Switzerland and for cross-border clients, we have to be able to think in terms of these two countries. Okay. And then because of that, then a client will have the right to claim for a refund, which is work, takes time, costs money, but also something that you can charge a client, depending on how your business model is made. So this is something, of course, that is going to be requested, because if you don't do that, you end up paying 10% more tax. So if you pay a 35% tax already on interest, whatever interest on German debt is, and you already pay 35% tax, plus you have 10% that you didn't get the refund, I'm not exactly sure it's really worth it to invest. You know, and what is your profit after tax? These 10% are important. So we have all these complex mechanics of, of course, that for a Swiss bank, you would have, if the product was bought in Switzerland, then we have the Swiss upstream tax, which is a participate. And we have the UK domestic tax. We have countries with which the UK has a double taxation treaty. And we have also countries which have actually a facilitated management of these upstream taxes so that you don't have to require a refund, but actually you have an upfront deduction. Because there are these, the QIs, the US system, where actually you can put your clients in different pools. So actually they pay upfront the right amount of tax. They don't pay 30%, but they might pay 15% if they're UK, I don't know exactly what the amount is. So they are in the right pool so they don't have to ask for refunds, which is a competitive advantage for the US financial market place. And of course it would be good if we did that in Switzerland too, because that would privilege our companies. This is something which has been in the discussions for some time and still in this discussion process. So how can we achieve that in Switzerland too? Because if we managed to have deduction instead of refund, that would give an advantage to our industry, our large companies. And everything which is on the Swiss exchange, Swiss companies. And of course there are countries which have no double taxation treaty, which is again another matter, more complicated. In any case, these clients need to declare in the end to his tax authorities. So whether he's Rubik declared, whether he's Rubik, and he has to pay a tax through the Swiss bank in the end, it always ends up as a declaration to those guys. So if we ask the Rubik mechanics, which is a rather complex thing and I don't have time to go too much in detail, I think I could speak about that for 20 minutes, but first look that is rather complicated. And we have, this is the channel from which you have dividends and interest, primary market, and this is the channel where you have disposals and so on through the secondary market. Schematically and you have the interaction between the European Savings Directive and Rubik which is, I think, when somebody has really understand how you make the connection between all these things, I think you're good for graduation. And the first one is a life and death proposition. I believe it's fairly clear. We had last week or two weeks ago a denouncement from Bank Frey to say, basically we have clients, we have everything we need, but because of all these red tape and probably because of a problem with forms called double nine and double eight ban, which are IRS forms, well they just, so they had too much trouble with the US Department of Treasury and the US Department of Justice because of US regulation, which is called F-bar, plus the UBS case, plus the lever lease, plus, plus, plus, plus, plus, and they threw up their arms in despair and they are going to basically make an orderly retreat. So, and they will cease to exist as such. And this is basically, this is the problem. What, is it the Department of Justice that is going to kill a bank? Yes, maybe not. But one may be killed, the bank is the amount of red tape, the amount of work, the amount of daily routine that needs to be implemented for which we don't have originally the equipment when we're not equipped for that. So the thing that might kill a bank is not necessarily that, but actually everything that goes around it. So I would like also to give a little background information. This industrial requirement has been precipitated by tax demands. But I think it would have happened anyway. Because this is just an industrial, the tax authorities requested it from the banks because they thought the banks right now should have the technology to do that because the technology exists. Ten years ago they would have never required it because the technology didn't exist. So they thought, well, since the technology exists, then we can ask them from the banks. But if the tax authorities had not requested it from the banks, who would have the clients? Because for them they expect, because the world is evolving, that they get better reporting, that they get reporting in any way that they want. They want, maybe they don't want anymore to have hold mail in the bank, but they want to have a secure delivery of their documents. They want to have their financial statements delivered, they want the tax statements delivered, even regardless of tax. So this is a trend and this has been precipitated by tax. But it would have happened anyway. However, it would have happened in a more calm way without challenging us to that point. That's the problem. So where do we go from now? Well, so that's the question, where do we go? We know more or less where we are, we need an orientation on where to go. First of all, what are the three drivers for a financial institution? This has always been true, but now we have to say it. The first one is we have to generate performance for our clients. I think at least conserve the value, but better if we can generate performance. So that's a purpose really for the business. And that's the main purpose and that remains the main purpose. But there is a second thing, and of course when there was easy money coming and there was this advantage and the market was going fine, all the other aspects looked so unimportant, so we didn't have to pay too much attention to that. But now, of course, the level of regulation has gone up. We have to pay attention to that constraint. Always existed. We always had regulation. But right now, this level of regulation has gone up. And actually this tax has actually killed client performance. Because now we are interested in client performance after tax. How many of you have a clear idea of performance after tax? Good. One, two, three, a few. And that's the important thing, you see? Because I mean, it's like when you're buying an airplane and you say the ticket is 102 euros and when you finish your check-in and it says airport fees, taxes and credit card fees, don't forget that. You get that much amount. This is irritating for the client. They want to know what's left on their account. And then, of course, there is a third one, which is very important, which is the corporate profitability. And we know that all this exerts a pressure on the bottom line of the bank. So this is an operational constraint. That is the one that may kill the bank or any financial institution right now. Is it that? I don't think so. Well, because in 2001 when the markets crashed, I mean, the clients were in trouble. The banks weren't. I mean, yes, they had less turnover and they had less operations. I mean, they had less income for those years. But the capital of the bank was not put in danger. But right now what we are talking is the capital of the bank itself, is at risk because basically whatever the costs of any settlement or any problem or any accident is paid by the banks from its own capital or own reserves or whatever. So these are operational constraints. What is more expensive than being compliant? Not being compliant. Okay, so what should a bank become in order to survive? A learning bank. Meaning a change really like realizing that we live in a new environment there are thousands of things to learn. The tax specialist must become an operational specialist. An operational specialist must become a tax specialist. We have to have this cross-disciplinary approach. And the idea is a bank that having master tax compliance is now able to move on to re-conquer its market niche. So we should not believe that we are now on the top of where we were. We are a little lower. And we need to re-conquer that. So in order to do that we have to make a quantum leap and a complete change compared to anything we had known so far in Switzerland. Yes, we had excellent banks. We had very good administration. But there was before that was the old age. The new age has new requests, new requirements. And the old structure of banks is no longer sufficient. So the three conditions, so I need to make it short. The three conditions to be on square one I would say that the first one is a commitment of the board in general management. And that may be something we always say when we manage operational risk and we want to do something in a bank, we need to have the commitment. But this is actually the most single, most important thing. That is to get on square bank, basically there must be a realization that the old age is dead and we are in a new age. With new strategies to find food, we are on the same ecological niche, yes. But we need to find new strategies to occupy that niche. Maybe we were animals that were picking low-hanging fruits. Now maybe we have to become like giraffes and to pick the high-hanging fruits. So same ecological niche, but different strategies. The second one, of course, it's very good to take decisions, but we need a roadmap. Otherwise it's just a Christmas or New Year wish, you know, resolution. I'm going to be a good guy next year. We need to have a roadmap to know how to get there. And of course, start upgrading the pre-existing processes and tax processes. Are we doing something right now? Okay, so then when we are square one, there are four phases. These are experimental, pragmatic phases, which we have seen from observation and from generalizing observation. The first one is conquering internal information. This is very difficult. Most projects which are having trouble with tax and implementation of a rubik or implementation of anything are stuck in that one. Because if you want to do correct calculation, you first have to have correct data and complete data. This is the single most and that's one. And I would say that many banks are still here. Trying to struggle with their internal information and acquisition prices and so on. And the second one is operational excellence, meaning that you need to put together the procedures and everything which is needed to produce. I will go more in detail. The third one, when you have that and you know that you master your general processes, then you can go to counter-specific strategies, not before. And then complex money. Okay, the phase one is conquering internal information. For example, having the correct data. What type of core banking system? Beware of fossil banking system that were developed before the age of relational databases. I tell you, it's not a joke to work with those things when you have to do tax calculations. And so the more modern are more adapted. That's a fact. Banks will enter IT even small, maybe at an advantage. Kind of counter-intuitive, but it's true. I mean, even a bank with 15 people, they have one or two good guys in IT, they may have a better time to market than the others. And significantly lower costs. Of course, what about small or bank, bigger banks? Which one is at an advantage? Well, not obvious. Big banks have massive teams, perhaps and so on, but they have to solve every single particular case. Meaning that programs are going to be horribly complicated. The databases are going to be horribly complicated. And managing exception is going to be a huge task. But if you're small, maybe you're just handling a certain niche type of thing, then you're focusing on a certain type of activity and you can master it because you can master the complexity. So a small one can be good as a big one. I don't think any... So I would argue that the idea that because one is a bank, is that with less than 10 billion of assets under management, you might have heard that theory, I think it's wrong. Then movements of assets in and out, those who are familiar with the subject, acquisition costs, change of beneficiaries, I think I could talk about that shortly for an hour, just about that. Okay. In phase two, once you have your acquisition costs and all your data about tax status for each country and so on, then you can start the revolution. The revolution is like the evolution we had in the 1990s or even 80s before that when we got into coal banking systems plus Swift and so on. We have same processes, but we have to review our account opening procedure. We have to... And the closing procedure, the execution of orders because we might have stand-duty and this type of complexities. The settlement of orders because settlement, of course, is getting more complicated because we have the... Stock exchange taxes, upstream taxes, stock exchange taxes and then we have capital gain and all this type of things. And corporate actions, of course, this one is also a subject we could speak for hours. In any case, we have transaction data, which was the phase one and only when you have your correct data, you can switch to the second phase, which is the purpose and the result, the deliverable of that phase is generic reporting. That starts making sense. So what we call generic reporting in 2013 is way more... The quality level that we require is way higher than it used to be in 2012 or 2011. So generic reporting is important. And then when you have generic reporting, you can go into country specific strategies. And of course, each of these countries have forms Modello, in Italy you have Scarto, Rispari, Mugistito and all these kind of strange things they have for each country. This is the European tax vulcanization. And of course, for the British, you have resident non-domiciled and all these kind of things. And then you have to think whether you are equipped for that country. There are not only tax constraints, there are constraints with the custodians, with the paying agents, industrial constraints. You buy the equipment or you make the right contracts with the right providers, you can have what you want. You don't have, you don't do it. So it can happen now that you can have that scene that you say, okay, next year we go to the Spanish market. And then maybe the COO says, no sir, we're not going to the Spanish market next year. This is the way, but I'm the boss and this needs to happen. Yes, but you're not going because we don't, unless you're willing to invest in the infrastructure. And of course, this might take a few months, but if you're willing to invest in infrastructure and we can make an evaluation of how much this is going to cost you, you have to build a plant, then we can serve the Spanish market. No plant, no market, five minutes. And of course then this leads us to generic reporting and all the regulatory reportings. You know, which are all these types. You have the country specific, the regulatory that we have to do anyway because we are in Switzerland and of course there is a reimbursement. So a lot of work. And then we go into complex money, which is actually now that we have all these industrial structures, now we can start marketing that industrial structures to clients and provide them the product they want. And of course then we have to put together all these things so that we need to have a strategy of what product we sell to what country. Who has a clear idea of what strategy of financial products need to sell to every country because they're going to be different. Some banks are more advanced than others. Of course there is all this regulatory, so irreproachable business conduct, which is a very important concept in Switzerland. And here we have sustainability and of course for the client trustworthy management and performance. Complex money is a cycle. You do calculations very good. Now you do the reporting. Good. Now you get client and a REM feedback. Why is it that we're paying so much tax and so on, taxes and so on. So you do research, then you rebalance. And then we start again. Until we find a good strategy for that country. Now I give you an example of what happens if you make a mistake for the UK. Let's say you have two funds. You sell the first one with a loss of 500 and you sell the second one with a loss of 100. You have made 500 income, right? So in a good case, that's what the UK is going to tell you. You compensate the loss with the win. This is 500. You pay 27%. That's the marginal rate. And you're going to pay that much tax. So you're going to pay 27%. You buy the wrong funds. So this is other income. No deduction of losses. So income, 1,000. Marginal rate for this represent. Total tax, you end up paying 86%. I think that's a good case for rebalancing a UK portfolio. So question, are we able to assess the client base according to tax residents? For each country, we say UK, this is our strengths, this is our weakness, opportunities, threats, whatever, the way you want to do it, of course. France, that you know exactly how many assets under management you have, the number of portfolios, the number of beneficial owners, and what type of products you want to sell them. That's complex money. So it means that you have to know how each product in your bank or that you're proposing to your client is going to perform for that type of client, for that type of country. If you know that, you're in complex money. And the formula for survival is outperformance after tax plus profitability. That's the formula, while being compliant. That's the cost, that's the penalty. And here is a conclusion. You have everything on one page. So you have the findings, the four findings we have found before. We have the preliminary steps, the phases. And the formula for survival. And I'm almost in time. And so thank you for your attention. And if you want to ask questions, I think it's the moment for questions, or you want to say something? Thank you for your attention. Who has the first question? What should then come first? What's my answer to Singapore? To be honest, that's a good point because I think there are competitors. I'm not a specialist of Singapore, but I believe in Switzerland we have a long tradition, probably closer to Europe. And we have a client base. So we have to keep it and be better than they are. So it's like asking the Swiss clock industry how do you compare with the Japanese? I think we just have to be better than they are. But we have already a client base. We have a brand and we have an experience, maybe in customer service that maybe gives us an advantage. We still have the plumbing. So that would be my answer. Maybe not very satisfactory, but it means that the race is on. So if we want to, we have to win it. Yes, that's a question. There are some reports or comments that have been made recently of how many banks should disappear in Switzerland due to the changed environment. Are you equally negative regarding how many banks will not survive from what you have seen and from your analysis? That's the first part of my question. The second part of my question is what do you think will be the bigger obstacle for those banks? Is it the performance and profitability or the compliance that makes disappear the most institutes? Okay. So for the first part of your question, I will say I would say there is a trend. It's like you're a car and you drive your car and if you don't turn your wheel, this is where you're going. So a certain number of banks maybe are going to the wall. Okay, this is possible. But what I say is that this is not inevitable and smaller banks have perfectly the possibility of surviving if they take the right decisions. And as I said, the assets on the management are not your criteria. The real criterion is how much cash you have at hand and how much turnover you can handle. Meaning you can be a bank with 10 billion assets under management and you could maybe have 100 staff and you have the same bank with the same assets under management and 250 staff. Guess which one is going to survive. Okay, so it just means efficiency is an important thing. Not the assets under management, but the efficiency. So the fact that you're big or small has nothing to do with your efficiency in principle. Now for the second part, what is the biggest obstacle? I would say this is square one. I think this is the biggest obstacle. Meaning whether one really wants to change the way one operates and it's like an entrepreneur risk. That's the real issue. I mean, do I want to take that entrepreneur risk of in that changing environment to change the way my business works and changing it, do I want to go through all that trouble? I think this is the main thing. But I would say that most banks unless they're already in big trouble because of compliance issues, meaning that they're already in the targets of the Department of Justice or whatever or they might think they don't make it. But if a bank has a sufficiently sound situation I would say it's an entrepreneurship decision. Do I want to go through all the trouble? And when that is done, I think a human-sized bank can perfectly survive. So that would be the first one. Then, of course, the third one is a profitability issue. That's a key one, certainly. That's a profitability issue because a regulation will not kill you performance, but profitability, yes, because then you're no longer there to pay the salaries and then you have to close the business because in the end, this is what counts. So the regulation pushes down, of course, profitability and performance, but in the end, what will define whether a bank is still in business or not is its profitability. So efficiency would be being effective, getting the results when they want to and then efficient, yes? I don't see where the option comes from of doing it or not. This is licensed to operate. Yes. You do it no matter the length or not or you are out of business. Exactly. There are various ways to go out of business. One way is just to sell the bank or to sell part of the clients. You could say, okay, I don't want to deal with those clients or with that client base or you sell the bank. And actually, a number of banks have already done that in the last month. We have integration projects going on right now in the banks for banks which just say, okay, we don't think it's a good idea to continue that business because we are no longer interested. It's too complicated and too much risk. Or you say, I want, you know, it's an entrepreneurship, basically it's an entrepreneurship decision. You want to do it or you don't want to do it? Did I answer your question? Yes. There are ways out. You know, some banks can decide, okay, we will revert to be external asset managers. We don't want to bother anymore with being in banks too complicated. There's too many regulation risks and so on. We want to be an external asset manager. Why not? But of course you get out of the business but you can do that. Or a bank can fail, of course. If you'll find a question. Can we just make an external asset manager? I'll ask a question and I'll try to explain it. I'm curious how much you think that the Swiss structure, Swiss banking structure will change over time in what we've seen happen as a result of the U.S. That's where the external asset manager comes up. The reason I say this is the one thing we've learned with the U.S. is to go cross-border. This isn't about tax anymore, it's about cross-border investment regulations. For a bank to stay in the business with U.S. clients to request an execution, it needs an SEC license in its own to cross-border. Or it needs to work with an external asset manager who has an SEC license. What we've seen in the past is that Europe as an example tends to follow the U.S. The U.S. as directed came from the back of the QI. Part two will come off the back of that account, et cetera, et cetera. So my question is as Switzerland and the U.S. source out its problems, as the U.S.A. is fixed, and European countries start copying, is this actually going to see a significant change in how all the banks will come because the execution house is relying on cross-border licenses, relying on E&M for private relationships. If the U.S., Swiss model comes into play across the board, that's a significant change to what Swiss banking is going to do. Yes, you're asking the $1 billion question. Yes, at that point it's a political issue. I believe that, as I said, the EU is not against, per se, Switzerland. So I think Switzerland would have a good card to put the ships with the European Union. The second thing is that the political and diplomatic situation of the U.S. has been a little damaged in the last weeks. And for example, France was supposed to sign an inter- governmental agreement with the U.S. Unfortunately, the minister Muskovich won't then find the door closed because there was a shutdown. Now that he's back in France, then because of another matter which is called NSA, they summoned the U.S. ambassador so probably Muskovich is not going likely to go to Washington in the next weeks to sign that inter-governmental agreement. In May we will have the shutdown virtually in Europe because there are the European elections. So the situation is still kind of confused, but that's the political side of the matter. And of course the cross-border constraints and the access to the market is, I think, one of the that's the tip of the iceberg. But what I want to impress on you is that that's only the tip of the iceberg. Behind we have the market infrastructures and our market infrastructures are also access to the market because we are in the center of Europe. So all that part which is below the the water is actually a big card that we have because we can say, yes why are we discussing about that? There is this whole thing about to discuss you know and then we put the whole thing together it's like in the electrical industry okay we all have in mind the last mile but the battle is on the power plants, the distribution and all these things. And if we fight on for the last mile for the rest of Europe and the world fights for the power plants and so on we are missing an opportunity. So we need to fight for the power plants and the electrical lines. And there we have actually very good infrastructure in Switzerland. So this is the thing and this will depend how Switzerland manages but there are also if we are really mechanical if you leave me two minutes maybe I can give you an example. You remember when we had the Euro introduced we of course had a concern that what about Switzerland with the Swiss francs being excluded from the payment systems. You know what we did the Swiss? Probably not many know that we said okay we are excluded from the Euro system but we have a Swiss payment system. We are going to build in Switzerland a Euro paying infrastructure which is called Eurosic and to do that we are going to build the Swiss banks together. A bank in Germany which is called the Swiss European Clearance Bank which exists and still exists probably unless it changes its name. And basically which is doing being which has the access to the market infrastructure we have pulled together all our energies and our imagination of the Swiss and we have solved the problem once for all. You see? And that's the way you can solve the access to market. You know for example the problem of access of we can be imaginative the solution only one is good but give you an idea. Let's say it's a problem of having access in the market maybe we could have a foundation of something which is representing all asset managers of Switzerland so that they all have access to the European market whatever. You are affiliated with that one and that they give you your paper and there you are. And the Europeans are more than happy to talk about those decisions but if we are all trying to play unimaginatively and we are just thinking always about our last mile instead of talking to the market infrastructure we forget all these opportunities that we might have to actually win access to the market. So the solution I don't know it but imagination and proposing solutions and the Europeans are more than happy because MIFI2 is a big thing so if we can propose them solutions to solve that first for them without them making new directives and making you and complicating their lives they will be more than happy. That's my idea about that. Probably some politicians might not be happy but globally I think the Europeans might be. Many thanks to Laurent Francescini. So sandwiches are ready outside. Congratulations excellent presentation. Thank you very much.