In late October, more than 40 of Europe’s most powerful bankers gathered at the palatial Dolder Grand Hotel overlooking Zurich for three days of discussions about the state of the industry.
Participants were given the chance to quiz Switzerland’s Finance Minister Karin Keller-Sutter and central bank governor Thomas Jordan, after they played key roles in the rescue of Credit Suisse by rival UBS. It was just over 6 months.
The meeting, which was not made public, was organized by a highly influential organization whose existence is largely unknown to all but a few members.
The Institut International d’Etudes Bancaires is the most exclusive and secretive networking club in European finance, where top bankers mingle with guests ranging from presidents and prime ministers to royalty and central bankers.
“This is not like Davos, where anyone can attend,” one long-time member told the Financial Times. “This is truly exclusive.”
The IIEB was founded to foster closer ties between banks at a time of geopolitical tension and challenges to financial stability across Europe, but its secretive and lavish meetings are a modern-day challenge to transparency. There is a danger that they will be seen as out of sync with the expectations of the public.
Per Borman, chairman of Swedish bank Handelsbanken, told the FT: “We have been members for decades when this organization served the purpose of bringing European banks closer together.” “But after the financial crisis, we felt that its extravagance and lack of transparency did not align with our values.”
For 73 years, the IIEB has brought together the heads of Europe’s largest banks twice a year in luxury hotels and royal palaces across the continent to discuss sensitive topics such as M&A deals and global policy decisions.
The group does not have a website, and its members, meeting agendas, and minutes are not publicly available. Members declined to share details of the discussions, several people told the FT on condition of anonymity.
IIEB is not only a forum for the exchange of ideas among Europe’s most connected financiers, but also an elite group where bankers’ partners enjoy three days of gala dinners, private tours of historic buildings, and luxury shopping trips. It’s also a social club.
European financial institutions have lagged far behind their U.S. rivals in profitability in recent years, are under pressure to improve lackluster valuations, and the continent is seeing a long-heralded wave of cross-border trading. IIEB is entering one of the most difficult situations. It has been through a significant period since it was founded after World War II.
IIEB was founded in Paris in 1950 by the heads of four financial institutions from across the continent: the Bank of Credit Industries and Commerce, the Swiss Union Bank, the Bergik General Bank, and the Bank of Amsterdam. Its purpose is to hold regular top-level discussions on trends in financial institutions. Not only the banking sector, but also the economy and monetary system.
It was part of a number of transnational organizations established during that period to foster closer ties between organizations in countries that had recently been at war with each other.
The IIEB’s original purpose was to improve international capital flows and combat currency controls in the face of increasing government interference in financial systems.
The first meeting, held in Paris in April 1951, brought together the heads of 30 European banks. No British banks attended because the Bank of England had initially blocked them from joining.
Ilaria Pasotti, a researcher who has studied the organization’s early archives, said the themes being discussed reflected the concerns of European bankers throughout the second half of the 20th century.
In the 1950s, there was much discussion about establishing subsidiaries in former colonies, but by the 1960s, issues such as the international role of the dollar, the issue of fixed exchange rates under the Bretton Woods system, and the threat of American takeover of European banks were gaining attention. I started collecting them. .
Towards the end of the century, IIEB discussions became more concerned with the influence of the euro, the growth of derivatives markets, and M&A transactions among large banks.
“There are only a few photos of gatherings in the archives, mainly dinners, cocktail evenings, visits to museums and palaces,” Pasotti said. “This emphasizes the confidentiality of the meeting.”
In the archives of Italian financier Intesa Sanpaolo, there are only 18 early photos of IIEB events.
The club’s desire for secrecy has made some members sensitive to the club being perceived by outsiders as a cartel. They argue that banks remain commercial competitors.
In one of the few public speeches made to the IIEB, European Central Bank Vice President Lucas Papademos quoted Adam Smith’s warning against collusion at the IIEB meeting in Athens in October 2006. and began his speech. national wealth: “Co-workers rarely meet together, even for merry purposes or diversions. But when they do, the conversation turns to conspiracies against the public and price gouging.” It ends with some kind of trickery.”
Mr. Papademos continued, “If he had seen this gathering of top bankers from all over Europe, would he have expressed such an opinion? “It should also be a cause for alarm for central bankers.” I highly doubt it. ”
Contacted by the FT, the Swiss Ministry of Finance and the Swiss National Bank each confirmed that Keller-Sutter and Jordan attended the Zurich meeting in October. They also provided details about what they discussed.
In her speech, Keller Sutter blamed Credit Suisse’s collapse on management, but Jordan also mentioned failed banks as part of her comments on financial stability.
Despite the importance of the topics being discussed, aside from one meeting in May 2010, IIEB’s activities have received little coverage for more than 70 years.
On the eve of a three-day meeting the bank was co-hosting, Mr. Bowman, who was Handelsbanken’s chief executive at the time, said the group’s lack of transparency and the cost of organizing such meetings came to a head. I withdrew from IIEB in protest against the current situation. Eurozone debt crisis.
The host bank of the IIEB meeting will cover accommodation and entertainment costs, and travel expenses will be borne by the attendees’ employers. The event in Stockholm included an overnight stay at the five-star Grand Hotel for more than 40 bank CEOs and their partners, a dinner at the city’s Opera House and a special shopping trip for their spouses. .
“We were not opposed to holding a meeting in Stockholm to discuss banking issues,” Borman recalled to the FT. “However, given the circumstances of the conference, which was held in secret and had an extensive participant program that included wives and husbands, we felt that it was out of touch with Handelsbanken’s culture. Ta.”
Among other leisure activities offered to spouses at the IIEB meet-up were a bike ride on an ice field during talks in Reykjavík in 2007, and a tuk-tuk ride and pastel de nata in 2019. We had a private tour of Lisbon’s hilltop São Jorge Castle, including tasting.
Distinguished guests are a staple of IIEB gatherings. In 2000 and again in 2009 the group was hosted by Prince Andrew, first at St James’s Palace and then at Buckingham Palace.
At the IIEB’s first meeting held in St. Petersburg, Russia in 2013, former President Dmitry Medvedev gave a speech, and the current President of Turkey, Recep Tayyip Erdoğan, attended a meeting in Istanbul when he was still Prime Minister of Turkey. The club welcomed him at the meeting.
Rare photos released at the IIEB event show bank CEOs, including UBS’s Sergio Ermotti and former Lloyds Banking Group boss Antonio Horta-Osorio, at Rome’s luxurious Quirinal Palace in 2015. Italian President Sergio Mattarella was filmed giving a speech in the room.
According to the members, transactions between banks are often discussed in official business, but most of the discussion is hypothetical. However, one of the largest bank M&A deals in European history was concluded at the IIEB conference held at the Hilton in Brussels in 1997.
There, Marcel Osper, CEO of the Swiss Bank Corporation, and Matthijs Caviaravetta, his counterpart at Swiss Union Bank, announced that they were planning a $29.3 billion all-stock merger of Switzerland’s second- and third-largest banks into UBS. agreed to establish a
Since then, Switzerland has always had three seats on the IIEB, with the CEOs of UBS, Credit Suisse and Lombard Odier. The collapse of Credit Suisse last year created a vacancy, and chief executive Julius Baer will take over at the institute’s next meeting in Dublin in May.
Philipp Rickenbacher, who was scheduled to participate, quit his job at a Swiss asset management firm last week after writing off a CHF606 million loan to troubled Austrian real estate group Cigna.
But it’s not just banking that’s being discussed. One member recalled receiving a phone call from Eddie Waters, long-time IIEB general secretary and chairman of KBC Bank.
Mr. Wouters is a former professional soccer player who represented Belgium and became friends with Marilyn Monroe, who played in the United States in the 1950s. He then became manager and later chairman of Royal Antwerp Football Club.
Mr. Wouters called because Royal Antwerp was negotiating the sale of the player with a club in the bank’s CEO’s home country, and he wanted to know if the club was in financial difficulty, and if he had to pay the agreed fee in full. I wanted to know if there was a possibility of paying.
The CEO said the investigation showed that the IIEB was achieving its main objectives. “This is a very special organization,” they said. “It’s all about sharing information and fostering camaraderie among CEOs.”