The secret to success? A moral code

Date: 3rd April 2018

Author: Unity Haggard

Fabrizio Cerina is a curious case in the world of finance. As chairman of Crédit des Alpes he has overseen the transformation of a small, Switzerland-based bank into a global force to be reckoned with. But his career has not been without its challenges. In fact, Cerina has endured (and overcome) a series of setbacks that would have spelt the end for many others.
The secret to his success? An unusual philosophy. Cerina believes – and has demonstrated – that investment banking is about more than turning a profit. It is about building relationships based on trust and credibility.

Born in Parma, Cerina attended university in Milan, followed by Graduate School of Economics at Stanford and then Graduate School of Business at Columbia. He briefly worked at Lehman Brothers in New York and London, before returning home. He had a wild, improbable dream: he wanted to buy a bank.
Aged just 24, he enlisted the help of a local Italian bank, and bought a 34% stake in Banque de Participations et de Placements, Geneva. A year later, he sold his share to Al-Mashreq Bank, at that time a leading name in the Middle Eastern financial world. He used the funds to acquire a small finance company; under his leadership, it would soon become Attel Bank Group.
Attel was to be the turning-point of Cerina’s career. Over the next ten years, his team built relationships with clients and other banks, eventually listing the company on the Luxembourg Stock Exchange, where it was valued at $125 million.
But in 1991, he arrived to find his bank in disarray. A trader had made a series of unauthorized investments in US securities, accumulating a loss of $46 million. His clients were beside themselves. Cerina was devastated. As he later told the Financial Times: “these clients were people I’d known for years.”1 The lawyers advised him to go down the route of sursis concordataire, by which he was only liable for 10-15% of creditors’ losses. But to Cerina, the solution was clear. He would pay the money back, with interest. It would be “more expensive,” he said, “but honourable.”

It was a singular case in perhaps the entire history of Swiss finance. Voluntarily, he put the company into liquidation and sold everything he owned – including a valuable Venetian masterpiece. The newspapers hailed him as a “banker and a gentleman,” but Cerina disagreed. “I only did my duty.” 2
Unfortunately for Cerina, his troubles were not yet over, with a Lugano public prosecutor launching an enquiry into the events. Whilst the case was quickly dismissed3, Cerina was determined to clear his name from any suggestion of wrongdoing. He successfully sued for damages, and received a historic (and rare) indemnification from the Swiss courts.
Cerina's credibility had been put to the test – repeatedly – and he had passed with flying colours4. And whilst his act of generosity had undoubtedly been admirable, it also proved to be an astute career move. A prominent Austrian family, grateful for his intervention over the affair, offered to help him start again. They provided the funds he needed to acquire a controlling stake in Crédit des Alpes.
Since then, Cerina has gone from strength to strength. Crédit des Alpes has made significant in-roads into US and South American markets, and built a strong presence in European private equity and M&A. In 2009, the group advised GVT during its $4.18 billion take-over by Vivendi – at that time the largest telecoms transaction in the world. On behalf of the Cipriani Group, they negotiated the high-profile acquisition and subsequent sale of the Saxony Hotel in South Beach, Miami. The sale remains one of the largest hotel deals ever completed in the city.
There is undoubtedly something to be learnt from Mr. Cerina’s career, and from his keen belief in accountability. He has confessed a nostalgia for the “old ways of investment banking,” but his success proves that these values are far from obsolete. They have a part to play in the business world of today.

1 . Financial Times, B. Masters, 19th July 2013
L’AGEFI, A. Fabarez, 15° October  1993

2 . Il Messaggero, C. Gu., 25th October 1993

3 . La Repubblica, 25th September 1994

4 . Finance Reconsidered: New Perspectives for a Responsible and Sustainable Finance, B. Paranque  and R. Pérez, 2016, pp 308-309

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Banker Fabrizio Cerina sold virtually everything he owned: ‘You have to be accountable’

Date: 4th September 2013


Author: Brooke Masters

First Person: ‘I repaid my clients’ fraud losses out of my own pocket’ As told to Brooke Masters I bought my first bank in 1980 or 1981. I had this dream because my grandfather had owned a bank and lost it in the Depression.

First Person: ‘I repaid my clients’ fraud losses out of my own pocket’

As told to Brooke Masters

I bought my first bank in 1980 or 1981. I had this dream because my grandfather had owned a bank and lost it in the Depression. My father gave me a little money; an Italian local bank whose managing director I had met years before at a convention lent me most of the rest. I was only 20 when we’d met, so I guess he took an interest in me.

He gave me a lot of advice. He saw me go to America for school; he saw me go to work at Lehman Brothers. In 1981 he lent me 1.7m Swiss Francs, I think it was, to buy 34 per cent of Banque de Participations et de Placements. I locked myself away there because there was a lot to repair. Eventually I sold the 34 per cent and bought Attel, a finance company, and turned it into an investment bank.

I didn’t sleep much then; we were turning a bank around. Building relationships with other banks and with clients takes a long time. It takes a minute to make a phone call but getting that personal mobile phone number takes a decade.

One morning in 1991 I went in very early and my number two was already there, which was unusual. I sensed trouble. He said, I have to show you something. Some prices from an American broker were going into the system whose values were 50 per cent higher than the real market prices. I remember feeling cold shivers.

We discovered that the head of private banking, who was managing client assets, had bought securities in various Nasdaq companies whose prices had collapsed. To hide the losses he got this American broker, who later was also arrested with him, to send him fake prices by telex. We had over 1,000 clients and he screwed up 163 of them. The losses came to $46m. These clients were people I’d known for years.

I had three options. One was to jump from the window. Another was to run away. The third was to accept a kind of Swiss Chapter 11 called concordato moratorio, where you can pay less than 20 per cent. My lawyers were saying, “Put up $10m and we’ll use $7m to pay off the creditors.” The rest would have gone to lawyers, advisers and accountants.

I flew to London to speak to one of the banks that was a victim of the fraud and I remember hoping that the plane would crash. It would have been a liberation for me. Instead I came back and announced that I would pay everybody back out of my own money. All $46m plus $800,000 in interest. I went against my lawyers’ advice; they said I didn’t need to do it. Plus the clients could still sue me through the civil courts. That didn’t happen, thank God.

I still have the list of things that I sold. I owned a painting by Michele Marieschi, a Venetian vedutista. I sold it. I sold my boat. I called my butler, Antonio, and said, “Antonio, there’s no more money, I’m sorry, you have to go.” He told me, “No, I’m staying. You don’t have to pay me. In six months you’ll be stronger than before.”

At first the press treated me almost like a criminal, but when I started reimbursing everyone, they depicted me as a hero. Both were exaggerations, I thought.

I spun Crédit des Alpes out of Attel and started again. Now I’m group chairman of Crédit des Alpes, and in 2009 I advised Vivendi on its $4.1bn acquisition of GVT. Looking back, I decided to reimburse my clients because of my father. He taught me that if you want to be in a business that implies a special degree of trust from customers, you cannot be motivated purely by self-interest; you have to be accountable. These are the old ways of investment banking.

I don’t want to come across as someone who is trying to teach morality. But for me it was more about building a relationship, building an enterprise. That takes 10 to 20 years. The system today puts too much pressure on young bankers to deliver immediate profits and that is wrong. It leads to disasters big and small every day.

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The banker and gentleman lives in Lugano

Date: 25th October 1993

Author: Il Messaggero, Rome (Italy)

MILAN – Swiss newspapers have dubbed him a "banker and gentleman", dedicating several front pages to him. But beyond the flattering portraits, Fabrizio Cerina is indeed a protagonist of a rare case, unique even.
Download original clipping
Monday 25th October 1993

Cerina of Attel & Cie - The "banker and gentleman" lives in Lugano

A bank's employee runs away with 45 billion [liras]. Cerina fills the hole and pays back all the creditors

MILAN – Swiss newspapers have dubbed him a "banker and gentleman", dedicating several front pages to him. But beyond the flattering portraits, Fabrizio Cerina is indeed a protagonist of a rare case, unique even.  He paid back the creditors and clients of Lugano based Attel & Cie, a subsidiary of Attel Finance, 100% of money owed plus interest. Cerina is chairman and controlling shareholder of the bank.  He put the company in to voluntary liquidation himself.

Instead of the short cut of a 'concordato moratorio’ - which normally involves a repayment to creditors of between 10 and 15% - the investment banker chose the path he calls "more expensive but honorable".  In three successive installments, he put 45 billion liras at the disposal of the liquidators, needed to cover the hole caused by an employee of the Lugano subsidiary. And last week, less than a year after the beginning of the affair, all customers have been paid back. It is the first time this has happened in the history of Swiss finance, probably in Europe. "In Switzerland, they were astonished - says Cerina, 40, born in Parma, the head of a group with a net equity of $60 million - but I think I only did my duty." It should also be considered that full repayment of creditors has had a positive impact on the image of the group, which is actively building stakes in the banking and finance sectors: it is a demonstration of strength, an excellent introduction card for business, and a guarantee of credibility, important especially now that Attel is in full expansion mode. The bank is involved in numerous ongoing investments and following, with great interest, the privatizations process in Italy. Attel is ready to bid for further stakes in the banking sector, in the belief that "if disposals are ​being made with a serious intent, there are great opportunities".  The incident has therefore passed without serious damage. The bomb exploded in September of '92, when Cerina discovered that one of the directors of the Lugano subsidiary was responsible for creating a substantial financial loss.

The stolen money was used by the employee for reckless investments, all ending badly, in U.S. securities.

C. Gu., Il Messaggero


25 Ottobre 1993

E'Cerina, della Attel&Cie

Il "banchiere gentiluomo" abita a Lugano

Un dipendente della banca era scappato con 45 miliardi. Lui ha coperto il "buco" e pagato tutti i creditori

Il “banchiere gentiluomo” abita a Lugano. Un dipendente della banca era scappato con 45 miliardi. Lui ha coperto il “buco” e pagato tutti i creditori. Milano – I giornali elvetici lo hanno ribattezzato “banchiere gentiluomo”, dedicandogli parecchie prime pagine. Ma al di là dei ritratti agiografici, Fabrizio Cerina è protagonista di un caso raro, addirittura unico: ha ripagato al 100% più gli interessi creditori e clienti della Attel & Cie, banca di Lugano controllata dalla Attel finance di cui è presidente e azionista di maggioranza, messa in liquidazione volontariamente dallo stesso Cerina.

Anziché la scorciatoia della moratoria concordataria – che comporta un rimborso ai creditori tra il 10 e il 15% - il banchiere ha scelto la strada che definisce “più costosa ma onorevole”: in tre tranche successive ha messo a disposizione dei commissari i 45 miliardi di lire necessari a coprire il buco causato da un dipendente nella controllata di Lugano. E la scorsa settimana, a meno di un anno dall’inizio della vicenda, tutti i clienti sono stati pagati. È la prima volta che accade nella storia finanziaria elvetica, probabilmente in quella d’Europa. “In Svizzera sono rimasti stupiti – commenta Cerina, 40 anni, nato a Parma, alla guida di un gruppo con mezzi propri per 60 milioni di dollari – ma io penso di aver compiuto solamente il mio dovere”. Va poi considerato che il rimborso totale dei crediti ha ripercussioni positive sull’immagine del gruppo, attivo nell’acquisizione di partecipazioni nei settori bancario e finanziario: una dimostrazione di solidità che è un ottimo biglietto da visita, una garanzia di credibilità. Importante soprattutto ora che l’Attel è in piena espansione. Numerose sono le operazioni in corso, mentre viene seguito con grande interesse il processo di privatizzazioni in Italia. Attel è pronta a candidarsi per quote nel settore bancario, nella convinzione che “se le dismissioni verranno fatte con serietà, si potranno presentare occasioni favolose”. L’incidente di percorso è dunque stato superato senza gravi danni. La bomba è esplosa nel settembre del ’92, quando Cerina scoprì che uno degli amministratori della controllata luganese era responsabile dell’ingente buco.

Il denaro perso servì al dipendente per spericolati investimenti, tutti finiti male, in titoli Usa.

C. Gu., Il Messaggero

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Fabrizio Cerina reimburses all Attel’s creditors

Date: 15th October 1993

Source: L’AGEFI

Author: Alain Fabarez

Traslation  from original article

For the first time, the liquidation of a financial company is settled by a 100% reimbursement in favour of the creditors (interests included)

Despite the sharp intervention of the Federal Banking Commission

July 1992: a hard month for Fabrizio Cerina, who had found himself until then riding the crest of the wave. In 1980, this young man created a financial company, Attel & Co., thanks to a loan jointly granted by the Banca Popolare di Novara and his family. Nobody knew it, then, but this had to be the beginning of a great success in the world of finance. His speciality: some assets management, but first of all sophisticated corporate finance which allowed him to grow not only in Switzerland, but also in Luxembourg, London, Milan, Monte Carlo, and in other places around the planet. At the end of the 80’s, he was controlling some ten companies, two of which in Switzerland: Attel & Co., devoted to assets management for individuals and institutions, with 600-700 customers, and the Crédit des Alpes. Attel & Co. was managed by one of his right-hand men, who had been working with him since over ten years and who enjoyed his total trust. A hard month of July, then, because at that moment, the manager announced him point-blank that he had lost 4 million dollars on some speculative US securities listed on the Nasdaq. Then, in front of the Board of Directors, the responsible admitted a loss of 21 million dollars and was immediately suspended. The Fiduciaire Atag, called-in to estimate the real loss, quantified it in September in some 32 million dollars. For a subsidiary company earning some hundred of thousand francs a year, it was a real catastrophe.

For Fabrizio Cerina, who had always been invariably succesful until then, the stroke was hard. He knew that, in business, only confidence is rewarding, and also that if he let one subsidiary company go bankrupt - something he could easily do, since according to his statements he was not at all informed of the actions of his man of confidence - he would loose nothing and could charge the loss on the customers of the bank. But his good name as a businessman was at stake, and he chose a completely different way: that of facing the situation and of injecting funds of his own to cover the loss.


The solution he chose was then the most expensive, but also the one that would maintain his good name. He decided to gradually inject 42 millions of Swiss francs - i.e., 22.2 millions at the end of 1992 and the balance at the beginning of 1993 - that would allow the company, which was put in liquidation, to pay all creditors and bank customers at 100 percent, interests included. A real première for Switzerland.

Today, it is over. All customers have been completely reimbursed. But despite the happy end of this affair, Fabrizio Cerina had to fight against the suspicions of some local journalists, some legal misunderstandings, the declarations of his former responsible and also against the intervention of the Federal Banking Commission, which asked him in December to liquidate one of the two Lugano subsidiary companies as soon as possible and so doing, not allowing him to give a job to more than 13 collaborators out of a team of about 60 he used to employ.

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Vivendi Gains Control of GVT― Trumping Telefonica

Date: 13th November 2009

Crédit des Alpes initiated this transaction and advised GVT's majority shareholders

Vivendi SA, owner of the world’s largest music company, gained control of GVT (Holding) SA by purchasing a majority stake and began a mandatory bid for the rest of the shares, trumping a competing offer by Telefonica SA.

Nov. 13, 2009 (Bloomberg excerpts)― Vivendi SA, owner of the world’s largest music company, gained control of GVT (Holding) SA by purchasing a majority stake and began a mandatory bid for the rest of the shares, trumping a competing offer by Telefonica SA.
The bid of 56 Brazilian reais a share values the company at 7.2 billion reais ($4.18 billion). Paris-based Vivendi said in a Web site announcement today it holds stock and options amounting to a 58 percent stake in the target company.
''The acquisition of GVT is totally aligned with our strategy of secular expansion in rapid growth economies,'' Chief Executive Officer Jean-Bernard Levy said in the statement. ''As it did some years ago in Morocco, Vivendi is committing itself to a large and lasting investment in Brazil, which both in the short and longer term will create value for our shareholders.''
Vivendi owns Maroc Telecom, French mobile-phone operator SFR and the world’s largest music company. The company is considering the sale of its stake in NBC Universal, the U.S. media company controlled by General Electric Co. Levy has labeled that business a ''non-core'' asset.
''It was a price much higher than Vivendi’s initial offer and also much higher than what I consider a fair price,'' said Alex Pardellas, a Banif Corretora analyst in Sao Paulo. ''They are paying a premium to set foot in the country.''
Vivendi said in the statement it purchased 37.9 percent of GVT’s outstanding voting share capital, and has a right to buy 19.6 percent more through call options, giving it almost 58 percent of GVT.

Best Offer

Telefonica, Europe’s second-largest phone company, offered to buy GVT shares for 50.50 reais each, 20 percent more than an initial 42-real offer Vivendi put out Sept. 8.
The bid was ''the highest price we could offer considering synergies between Telefonica and GVT,'' Antonio Carlos Valente, CEO of Telefonica’s unit in Brazil, said after Vivendi’s announcement.
The Spanish company also said in an e-mail Brazil is a ''highly strategic market'' for the company and it is still looking for opportunities in the country.
GVT paid 100,000 reais for its license in August 1999 to operate in the same 10 states as Brasil Telecom SA while Telefonica bought Telecomunicacoes de Sao Paulo SA to operate in Sao Paulo, the most populous state.
GVT, Brazil’s fourth-biggest high-speed Internet provider, has a 15,000-kilometer (9,300-mile) fiber-optic network.

About Vivendi

A world leader in communications and entertainment, Vivendi controls Activision Blizzard (#1 in video games worldwide), Universal Music Group (#1 in music worldwide), SFR (#2 in mobile and fixed telecom in France), Maroc Telecom Group (#1 in mobile and fixed telecom in Morocco), Canal+ Group (#1 in pay-TV in France) and owns 20% of NBCU (leading U.S. media and entertainment group). In 2008, Vivendi achieved revenues of €25.4 billion and adjusted net income of €2.7 billion. With operations in 77 countries, the Group has about 43,000 employees.

About GVT

GVT is the most well-recognized alternative to the fixed-line incumbents in the Brazilian market and the fastest growing telecommunications services provider in Brazil. GVT offers a diversified portfolio of solutions for conventional and VoIP telephony, corporate data, broadband, Internet services and pay TV. GVT’s net revenues and Adjusted EBITDA for the twelve-month period ended June 30, 2009 were R$1,495.0 million (about 800 million USD) and R$574.1 million (about 300 million USD), respectively. For the period from 2006 to 2008, GVT generated compounded annual growth rates of 31.1% for net revenues and an increase of 40.2% in Adjusted EBITDA, recording an Adjusted EBITDA margin of 38.0% in the first half of 2009. As of June 30, 2009, GVT had approximately 2.3 million lines in service (including voice, broadband, data and VoIP services). GVT is traded on the Brazilian BOVESPA under the symbol GVTT3.SA.

About Crédit des Alpes

Crédit des Alpes is a financial services group specialising in sourcing and financing exclusive investment opportunities for institutional and corporate clients.
Through its subsidiaries it also advises and co-invests in real estate and private equity transactions.
First established in Switzerland, Crédit des Alpes now operates throughout the world, and has executed transactions in numerous jurisdictions, in particular the United States, the United Kingdom, South America and Russia.

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