Shareholder’s champion fails to deliver

Martin Ebner set out to turn the Swiss into a nation of shareholders Keystone

Swiss financier Martin Ebner liked to portray himself as the defender of the small investor, but on Wednesday he cut his losses.

The sudden decision of Ebner’s BZ Holding Group to sell all of its registered shares in its listed investment funds to Zurich Cantonal Bank – a bank guaranteed by the state – leaves Ebner’s image somewhat tarnished.

At the start of the week the BZ Group denied there were any financial problems, but on Wednesday announced that it was handing control of the funds to Zurich Cantonal Bank for an undisclosed sum.

The funds in question – Pharma Vision, BK Vision, Spezialitaten Vision and Stillhalter Vision – have equity holdings worth about SFr3 billion.

During the 1990s Ebner tapped the wealth of thousands of Swiss households and popularised investments in shares as a way of beating low interest rates on savings accounts.

Ruthless corporate raider

Ebner started his career with private family bank Vontobel, but soon set out on his own. He quickly made headlines as a ruthless corporate raider, buying shares in high profile companies and then demanding management changes and better share performances (see related story “Ebner’s empire.”)

“He’s a symbol for ordinary people that you can make money without really working;” said Thomas Ungern, professor of economics at the university of Lausanne. “In fact Ebner has never really produced anything, and although he has had short term success, in the long term his strategy has failed.”

Stock market crisis only partly to blame

Meanwhile Lorenz Burkharter, of Burkarter Asset Management, believes the BZ Group’s problems can’t be blamed only on the recent stock market crisis.

“The immediate reasons for the sale are the weak stock market and BZ’s high risk investment strategy,” Burkharter told swissinfo. “But in fact Ebner’s decline began two years ago when the markets turned.

“It’s easy to be successful when the markets are going up,” Burkharter continued. “But times have changed, and now we are really seeing who is a good asset manager and who is not.”

Political implications

Although the newly sold funds will be secure in the hands of Zurich Cantonal Bank – it is Switzerland’s third largest bank and has a state guarantee from canton Zurich’s taxpayers – the fact that Ebner had to sell them at all will have political implications.

Given the recent abysmal performance of the stock markets, many Swiss who bought into Ebner’s dream of shareholder value are already likely to be wishing they had left their savings in the post office.

And other high profile financial failures, most notably the bankruptcy of Swissair last year, have raised serious questions about corporate responsibility.

Greater government control?

A spokesman for Switzerland’s left-wing Social Democrats told swissinfo that the Ebner case confirmed the need for greater government control of private financiers.

“At the moment Swiss law is not strong enough,” said Jean-Philippe Jeanneret of the Social Democrats. “What we need is legislation which can promote economic success and still protect small investors.”

But Gregor Rutz of the right-wing Swiss People’s Party – with which Ebner has close ties – dismissed this idea.

“It’s a purely private financial affair,” Rutz told swissinfo. “There’s absolutely no need for government intervention. In fact the state already interferes too much in business.”

Ebner’s future

The BZ group’s Vision investment funds, which hold shares in companies such as Novartis, UBS, ABB and Nestlé, have lost up to half their value since the beginning of the year, a situation which raises questions over the future of Ebner’s remaining business holdings.

But asset manager Lorenz Burkharter believes the sale to Zurich Cantonal Bank should put Ebner and BZ back on a firm financial footing.

“I think the worst is over now,” said Burkharter. “The companies in those funds are doing well on the markets, so I think with this solution everything should be fine again.”

swissinfo