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Finma lacks teeth compared with regulators in other countries, says panel following near-collapse of Credit Suisse

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Switzerland’s market regulator, Finma, is too weak to adequately handle banking crises, according to a government-appointed panel of financial experts tasked with analysing the near-collapse of Credit Suisse.

The Swiss government should urgently explore changes to the law to equip the watchdog with greater powers, the committee of eight academics, bankers and former regulators concluded in a 98-page report delivered to the Swiss finance ministry on Friday.

Finma lacks teeth in comparison with international peers and struggles to enforce its will on the country’s banking sector, the report said, in what is the first official, public analysis of the crisis that nearly sunk the country’s second-largest bank in March.

Even though Finma observed scandals, a share price plunge and an erosion of credit ratings at Credit Suisse, the bank’s management was “recalcitrant” in the face of regulatory scrutiny, the report stated.

Unless Finma declared the bank “non viable” — a designation considered to be a nuclear option — the authority had no power to compel management or strategic changes under its charter, it added.

With UBS’s takeover of its former rival — a deal that has created a banking behemoth that dominates the Swiss market — the need to bolster Finma’s authority is greater than ever, the report warned.

It recommended that several new powers be granted to the regulator.

These would include the ability to issue fines, a penalty it is currently unable to impose on banks.

Finma is the only regulator in a leading global financial centre that does not have the power to levy financial penalties. As a result, many banks do not take it seriously, the report said.

It also called for Finma to be able to “name and shame” banks and individuals subject to enforcement proceedings. Under Switzerland’s existing laws, which remain tilted heavily in favour of discretion, Finma is permitted only to publicise details of financial misdemeanours or infringements in the most egregious of circumstances.

Publicising financial abuse would have a positive “disciplining effect” on institutions, the report said, noting that regulators in the US and UK publish information on almost every enforcement decision they take. At present the Swiss public “can be unaware of a bank’s unsafe statue” as a result.

The report also recommended legal changes to make it harder for banks to challenge Finma when the regulator does order institutions to make changes. It notes that, at present, if a bank decides to contest a Finma order, the legal process means it can take years for Finma to obtain a ruling from the Supreme Court forcing compliance.

The committee held 27 interviews with senior figures involved in the Credit Suisse crisis. These included the top managers of Credit Suisse and UBS, politicians, the heads of central banks and Finma’s peer regulatory bodies in other countries.

The Swiss government is expected to recommend a package of financial market reforms in response to the crisis in the coming months.

A special parliamentary committee of inquiry is also about to begin a probe in picking apart the crisis, equipped with powers of subpoena.

Kering began taking its beauty business back in-house in February.

What will be next for Kering Beauté?

After months of speculation, the French luxury house in early February said it had begun taking its beauty activity back in-house, and that it appointed Raffaella Cornaggia chief executive officer of Kering Beauté — a new position in a new division.

She was charged with developing a team with expertise in the beauty category for Bottega Veneta, Balenciaga, Alexander McQueen, Pomellato and Qeelin.

At the time, Kering said: “The creation of Kering Beauté will enable the group to support these brands in the development of the beauty category, which is a natural extension of their universe.”

Up until then the buzz had been intensifying about whether Kering would make such a move and if so, what form that might take, especially in regard to jewels in the crown, Gucci and Yves Saint Laurent, whose beauty licenses are held by Coty Inc. and L’Oréal, respectively.

Kering Beauté wasted no time and in late June made the bold move of acquiring Creed, the oldest existing high-end niche fragrance house, in a deal reportedly worth 3.5 billion euros.

François-Henri Pinault, chairman and chief executive officer of Kering, said during a call regarding the group’s half-yearly 2023 results that Creed had revenues of around 250 million euros in 2022, with a very high EBITDA margin.

“We have strong growth opportunities for Creed,” he said, noting the brand has very limited exposure to the Asia Pacific region, little to no presence in travel retail, and room to expand its women’s lines.

The Creed deal came after Kering was in the chase to acquire Tom Ford International, which eventually was bought by that company’s existing beauty licensee, The Estée Lauder Cos. Inc., for $2.3 billion. Kering was also reportedly interested in acquiring luxury brand Byredo, which was snapped up by Puig for an estimated 1 billion euros.

Over the past two decades, luxury goods companies have been taking back full control of the brands they own. That can pack a powerful punch, giving them more consistency, synergies and power.

Today, among Kering’s other owned fashion and jewelry labels, Interparfums runs Boucheron’s business in perfume, while Lalique Group develops Brioni’s fragrance activity.

So what could be next for Kering’s beauty division?

Might Valentino beauty be in the scopes? Kering in late July said it had bought a 30 percent stake in the Italian luxury brand as part of a broader partnership with Qatari investment fund Mayhoola, with an option to buy 100 percent of Valentino by 2028.

Today, Valentino’s longterm fragrance license is held by L’Oréal, which became the licensee on Jan. 1, 2019.

Aside from other acquisitions, there remains huge opportunities for Kering Beauté to grow the brands it already has in-house by strengthening their fragrance businesses and stretching into other categories, such as color cosmetics and skin care.

Offering, likely on Riyadh exchange, would be largest in history of capital markets; similar previous plans have fallen through

Hong Kong draws down shutters as eye of supertyphoon Saola focuses on financial center

HONG KONG—As residents of Florida and South Carolina struggle with the aftermath of storm Idalia, southern China is being lashed by for an even more powerful cyclone.

In the Asian financial hub of Hong Kong, the government took no chances with supertyphoon Saola, raising the city’s storm alert in the early hours Friday, with all schools, the stock market and most public transport closing for the day. After a calm start, winds began to gust strongly by mid-afternoon and government meteorologists issued the highest storm alert at around 8 p.m. local time, the first level-10 typhoon in five years.

After gathering strength in the Pacific Ocean to become a typhoon about a week ago, Saola had left one person dead and forced hundreds of thousands from their homes in the Philippines before grinding toward southern China. Wind speeds topping 130 miles an hour on Friday make Saola a Category 4 cyclone by U.S. standards. Idalia briefly touched that category before battering northern Florida as a Category 3 hurricane.

Hurricanes and typhoons are different names for the same type of rotating storm, depending on where it occurs. Also known as tropical cyclones, they develop over warm ocean waters near the equator. Those that form in the North Atlantic or central and eastern North Pacific are called hurricanes. Those born over the western North Pacific are known to Asia as typhoons.

Saola becomes only the 17th storm to trigger the level-10, hurricane-force gale warning since 1946, according to the Hong Kong Observatory. While deaths are now rare in the city, that storm five years ago caused more than 120 fatalities in the Philippines. Another typhoon, Hanna, affected the main Philippines island of Luzon on Friday.

Warming ocean temperatures are expected to fuel more cyclones. Decades of climate warming and an El Niño pattern that releases heat from the Pacific into the atmosphere have brought Atlantic sea-surface temperatures to a record high this year, according to experts.

An earlier typhoon wreaked havoc in China’s northeast in August, causing torrential rain and widespread flooding in and around the capital, Beijing, that left dozens of people dead and millions more displaced. China’s government earlier warned that changing weather patterns would lead to more flooding in some regions, affecting agriculture.

Saola has a double-eyewall structure, the Hong Kong Observatory said, which was an indication of a particularly intense storm. “Remain where you are if protected and be prepared for destructive winds,” the observatory said, adding that the center of the storm would pass within 25 miles of the city over the next few hours.

As Hong Kong rides out the winds, the observatory warned of flooding caused by heavy rain and a storm surge that would push sea levels to record highs. It predicted the tide in one bay in northeast Hong Kong would be around 13 feet higher than normal.

China’s central government issued its highest typhoon warning on Thursday, ordering the deployment of emergency rescue vessels because of the rough seas.

In Hong Kong Friday, the stock exchange halted trading—a practice that sets it apart from other major bourses. More than 360 flights were canceled. All schools were closed on what would have been the first day of classes for many students.

Authorities in the neighboring tech and manufacturing hub of Shenzhen ordered work, business and market activity to stop late Friday afternoon. All flights from the city’s airport were grounded from midday, while schools were suspended a day earlier.

The world’s longest sea bridge, connecting Hong Kong, mainland China and Macau, closed on Friday afternoon.

The government in Macau, like Hong Kong a special administrative region of China, said it could raise the city’s storm signal to its highest category early Saturday. Officials in the gambling hub were accused of failing to raise alerts in time in 2017, when a typhoon killed 10 people in the city of fewer than 700,000 residents.

Regulators are concerned deal would consolidate US travel site’s market position and hurt rivals

EU regulators are set to block US online travel site Booking Holding’s €1.63bn purchase of Sweden’s Etraveli Group following concerns that it threatens competition, according to four people with direct knowledge of the decision.

The decision contrasts with the stance of the UK’s Competition and Markets Authority, which approved the deal a year ago.

Booking announced in November 2021 its intention to buy Etraveli, which runs brands such as Gotogate and Mytrip and is owned by private equity giant CVC.

EU regulators are concerned that Booking’s acquisition of the flights-only company will further consolidate its position in the travel market and hurt rivals, said people familiar with the discussions in Brussels.

The move comes weeks after the European Commission, the EU’s executive body, said it was concerned the deal would give Booking a market advantage by boosting its place in the hotel booking sector and help it move into other services such as car rentals and flights.

It also follows a closed hearing where the company sought to appease regulators’ concerns by offering concessions that included allowing rivals to have more visibility on its site as alternatives for hotel bookings.

The move by the EU also comes after a test of the remedies with market participants, who rejected the concessions as not being enough to guarantee free and fair competition, these people added.

Antitrust investigators said that following an in-depth probe they were worried the deal would “strengthen Booking’s dominant position in the hotel (online travel agent) market further, increasing its bargaining position towards hotels and diverting demand from cheaper alternative sales channels”.

Regulators said choice was “already limited” in the sector and that Booking seemed to have an “unconstrained” position.

Brussels is also concerned that the acquisition will lead to higher barriers to entry and expansion by making it harder for rivals to gain new customers.

Separately, regulators fear Booking would “significantly” boost its online traffic and raise costs for hotels — ultimately harming consumers.

An official decision is expected later this month but people with direct knowledge of the EU’s thinking said the merger would be vetoed.

The decision is a rare one by the commission which clears most deals and is likely to be the last one blocked under current competition supremo Margrethe Vestager before she takes unpaid leave to campaign for the top job at the European Investment Bank.

A change in commissioner is unlikely to affect the decision, they added.

The commission declined to comment. Booking did not immediately respond to a request for comment, but people with knowledge of Booking’s thinking expect it to appeal against any veto.

The company is also set to renew a four-year commercial deal it has had with Etraveli for another five years.

Other deals facing particular EU scrutiny include Orange’s proposed €19.6bn acquisition of mobile telco MasMovil because regulators are concerned the transaction may reduce the number of operators in the Spanish market and ultimately lead to higher prices and less innovation.

CoreWeave, a fast-growing cloud computing startup that rents specialized servers for developing artificial intelligence, has hired Morgan Stanley to sell employee stock to investors at a valuation of at least $6 billion, three times higher than its valuation in an equity financing in May, according to someone with direct knowledge.

The deal involves selling about $500 million worth of existing common shares, which would represent about 8% or CoreWeave’s stock, depending on the final valuation. CoreWeave’s three co-founders, along with some employees, are expected to take part in the sale, this person said. The deal terms CoreWeave is seeking mean prospective buyers of the stock would likely need to value the company at more than 12 times its projected 2023 revenue—roughly double the average forward revenue multiple among publicly traded cloud firms, according to Koyfin.

THE TAKEAWAY

• Nvidia has propped up CoreWeave as an alternative to big cloud providers

• CoreWeave is also considering raising equity financing as part of the sale

• The company is aiming for a future IPO

The total value of the shares CoreWeave’s management hopes to sell is unusually large for an employee share sale. The move comes as venture investors are still smarting from their decisions to let the founders of several crypto, enterprise software and other companies each sell hundreds of millions of dollars’ worth of shares at the peak of the startup funding boom in 2020 and 2021. The value of some of those firms has since plummeted. To be sure, CoreWeave is in a much stronger financial position than many of the firms whose founders cashed out. And it has raised $2.7 billion in debt and equity this year alone as it races to build data centers across the country.

The sale of shares is also notable given that CoreWeave, which started as an ethereum-mining business in 2017, only began to take off earlier this year. That’s when Nvidia selected it as one of the few recipients of its most advanced server chips for AI—precisely at a moment when demand for the chips went through the roof.

Anyone buying CoreWeave shares would have to believe the company will remain close to Nvidia. The chipmaker’s main customers for server chips are major cloud providers like Amazon Web Services, but it also views them as competitors because the cloud firms make their own AI chips.

While proceeds from the sale will go to the CoreWeave employees selling shares, the company would consider selling new shares if demand pushes the company’s valuation near $8 billion, said the person with direct knowledge of the process. Morgan Stanley is expected to set the valuation in mid-September, this person said. CoreWeave’s founders have told shareholders the share sale is intended to diversify its investor base as the company aims for a future initial public offering, this person said.

A spokesperson for CoreWeave did not immediately respond to a request for comment. A spokesperson for Morgan Stanley declined to comment.

Bloomberg reported earlier that CoreWeave hired an adviser to help it sell a minority stake in the company, but did not specify the nature of the deal.

CoreWeave rents access to Nvidia’s hard-to-get graphics processing units, which AI and machine-learning developers need to develop software such as the large-language model that powers OpenAI’s ChatGPT. Nvidia invested $100 million in CoreWeave earlier this year and granted it preferential access to its most advanced GPU, the H100, which even major cloud providers including AWS and Microsoft Azure have struggled to get enough of, The Information previously reported.

CoreWeave’s quick ascent has come with growing pains. In recent months, the company has lowered its revenue and capital expenditure expectations for the year, The Information previously reported. Still, its lowered projected revenue of $500 million would be a roughly 20-fold increase from the $25 million it generated in revenue last year.

Formerly called Atlantic Crypto, CoreWeave was founded in 2017 by CEO Michael Intrator, Chief Strategy Officer Brannin McBee and Chief Technology Officer Brian Venturo, all of whom previously worked in finance. Intrator, who started a natural gas hedge fund before starting CoreWeave, made The Information’s list of the 30 Most Powerful People in Enterprise Software this year.

CoreWeave’s backers include hedge fund Magnetar Capital, which led the recent debt financing, and prominent AI investors Nat Friedman and Daniel Gross.

After several years at Valentino, he takes over duties from Susan Chokachi, who is exiting Gucci after 25 years.

The changes keep coming at Gucci, with the runway debut of new creative director Sabato de Sarno only weeks away.

The Italian luxury brand said Alessio Vannetti is returning as its new executive vice president, chief brand officer, effective Sept. 4.

Vannetti, who was Gucci’s worldwide communications director from 2015 to 2019, has spent the last three and a half years at Valentino as its chief brand officer.

Back at Gucci, he takes over duties from Susan Chokachi, who is leaving the company after 25 years of service, most recently as executive vice president, chief brand and client officer.

Vannetti will lead Gucci’s brand and client engagement team and oversee “the company’s strategic brand and image direction, marketing, communications, metaverse and client engagement efforts,” the Kering-owned fashion house said in a statement Thursday evening.

He reports to Jean-François Palus, Gucci’s chief executive officer for a transitional period. Palus lauded Vannetti’s “extensive experience across prominent fashion brands, combined with his deep understanding of Gucci’s legacy, makes him the right choice to steer our brand forward.”

He noted Vannetti would work closely with him, De Sarno “and everyone at Gucci to craft the new chapter of the house, while enhancing our brand heritage, values and image consistency.

“I would like to extend my gratitude to Susan Chokachi for her remarkable contribution to Gucci for more than two decades and wish her well in her future endeavors,” Palus added.

Chokachi held many roles at Gucci, but is probably best known for being president and CEO of the Americas region from 2016 to 2022.

She “contributed to develop the company culture and helped to foster Gucci’s industry-leading position for global impact through Gucci Changemakers, the company’s legacy gender equality campaign Chime for Change, and the Gucci Global Equity Board,” the statement said, adding that Chokachi was “respected for her leadership, brand vision and business impact.”

Vannetti’s résumé includes senior positions in press and communications at Prada and Zegna.

Gucci has been rocked by executive turmoil, confirming in July that Marco Bizzarri, president and CEO of Gucci since 2015, is leaving the company. His last day at Gucci will be Sept. 23, after the brand’s spring 2024 show in Milan.

In the wake of Bizzarri’s exit, Francesca Bellettini, president and CEO of Yves Saint Laurent since 2013, was appointed Kering deputy CEO, in charge of brand development, in addition to her current role. All brand CEOs will report to her, and she will be responsible for steering the group houses in their next stages of growth, as reported.

At Gucci, Vannetti will be reunited with some of his former colleagues, including de Sarno, who was plucked from Valentino to succeed Alessandro Michele at the creative helm earlier this year.

Best known for his line of trenchcoats, the designer and consultant joins the brand as it gears up for its 30th anniversary next year.

PARIS — French cashmere label Pellat-Finet has appointed designer and consultant Dryce Lahssan, best known for his Lahssan line of trenchcoats, as creative director of collections and image as it gears up to mark its 30th anniversary next year.

The label, famed for its brightly colored cashmere sweaters with motifs such as marijuana leafs and skulls, was purchased in 2019 by Thierry Gillier, the founder of contemporary rock-chic brand Zadig & Voltaire. At the time of the acquisition, the loss-making label had been under court administration after entering bankruptcy proceedings.

In 2021, Gillier introduced a new brand identity, developed by Lolita Jacobs and Jean-Baptiste Talbourdet-Napoleone, that stripped out the founder’s first name. Earlier this year, the company opened a boutique on Rue Saint-Honoré as it aims to ramp up its visibility and growth.

Lahssan will show his first collection to partners and buyers by appointment during Paris Fashion Week, which is scheduled to run from Sept. 25 to Oct. 3, the brand said in a statement on Friday. He becomes the first creative director since the departure of Lucien Pellat-Finet, who founded the label in 1994.

“I am pleased to entrust the creative direction of Pellat-Finet to Dryce Lahssan. His incredible fashion culture, his luxury expertise and his 360-degree creative approach make him the ideal leader to transport this cult brand into the future,” said Gillier, who has pivoted the line towars ultra-luxurious knits with a more minimal, timeless feel.

A graduate of Studio Berçot in Paris, Lahssan has consulted for brands including Bulgari and Mary Katrantzou. “To take over a brand born from this transgressive mindset is a unique opportunity,” he said about joining Pellat-Finet.

“I am always trying to redefine luxury and move it forward with a disruptive approach. Now I am excited to do so while working with the best cashmere technicians and factories. Pellat-Finet captures the modern tension between luxury and self-expression, and this affords me immense freedom to write new codes and envision the brand’s future — a 3.0 image,” Lahssan added.