Closes Geneva Unit, Bowing To Swiss Competitors
ZURICH, Switzerland (AP) _ Chemical Banking Corp. said Monday it is closing its bond trading, foreign exchange and money market operations in Geneva because of insufficient profitability.
Chemical was one of the most active participants in Swiss franc bond trading but high local interest rates and the collapse of the Tokyo stock market in recent months have hurt the bank’s activitites in the Swiss market.
At the same time, Chemical said it was closing Chemical Securities Co. in Tokyo, which concentrated on marketing and brokering Japanese equities and equity-linked bonds under the direction of the Geneva office.
The moves were part of the American banking group’s strategy to ″focus only on activities where maximum profitability can be achieved,″ said Francois Larsen, director of the Geneva unit, called Chemical N.Y. Capital Market Corp.
He said the capital markets unit found it increasingly difficult to market its service after selling its Geneva private banking subsidiary in November 1988 to the French financial firm Dumenil-Leble SA.
Chemical also is closing its foreign exchange and money market operation in Geneva, leaving a seven-person cash management branch office of the New York- based bank in Zurich as its only Swiss presence.
Patrick Voegeli, the bank’s head trader, said two factors hurt profitability in the past year. High short-term Swiss interest rates made it expensive to finance bond positions, and sharp drops on the Tokyo stock exchange made Swiss investors reluctant to trade Japanese equity-linked instruments.
Chemical Bank joined Citicorp in founding the Swiss new-issues market in the mid-1980s. Trading on the market comes before the end of public subscription, and levels quoted there allow investors to judge the price they are offered by potential salesmen.
But Switzerland’s three big banks increasingly dominated the market since they began trading there in 1988.