Swiss ICSD SIS had a second successive record year in 2005, exceeding the 2004 financial result by 4% to reach CHF 29.6 million in profit. The result includes extraordinary expenditure of CHF 7 million associated with the merger of the SIS and Telekurs computer centres in early April 2006.
SIS adds that the higher profit was achieved despite price reductions of approximately CHF 23 million – a figure equivalent to 80% of the previous year- being granted to SIS clients in 2005. “The SIS Group once more gave the interests of its clients and the Swiss financial market priority over profit optimisation – true to its philosophy as a not-for-profit organization,” said the group in a statement. Further price reductions of around CHF 14 million have already been confirmed for the current business year.
It follows that the good result reflects high levels of stock exchange activity in 2005. With more than 25 m securities transactions, SIS SegaInterSettle AG increased settlement volumes by 14%. Assets under management increased by 28% to reach a new record level of CHF 2,504 billion. This growth was realised both in domestic and international business. However, SIS also alludes to “positive sales results” and tight cost management
As a result of price reductions which all SIS subsidiaries granted to their clients, consolidated income decreased by nearly 2% to CHF 191.4 million. At the same time, total expenditure was slightly reduced despite extraordinary depreciation of CHF 1.5 milion and pre-emptive allotments to the pension fund of CHF 5.5 million to cover early retirements and staff transfers to Telekurs Services AG.
In 2005, SIS x-clear AG acquired two London-based investment banks as clients, which it believes may be a foretaste of more business that has traditionally gravitated towards rival ICSDs Clearstream and Euroclear.
Shortly after SIS SegaInterSettle received a top rating, SIS x-clear was assigned Aa1/P-1, Moody’s second-highest external rating. Since SIS x-clear is the banks’ counterparty in the clearing business, this high rating is of particular importance, especially with the Basel II capital adequacy regime coming into view.
The share registration business, SAG SIS Aktienregister AG, won 18 new clients in 2005 and was able to further strengthen its position in the market.
SIS Systems AG and Telekurs Services AG merged the computer centres of SIS and Telekurs as of 1 April 2006. This included the transfer of 66 members of SIS staff to Telekurs Services AG. SIS says that the merger means both companies will achieve substantial cost synergies amounting to several million Swiss francs. This new structure will also help the companies comply with ever higher demands from the Swiss National Bank in respect of system oversight.
“We got off to a good start in the first quarter, and we are confident for 2006 despite some uncertainties as to how the market will develop,” says Peter Sami, Chief Executive Officer of the SIS Group. “As a key element of the Swiss Value Chain, we remain committed to enhancing the Swiss financial centre’s efficiency and competitiveness. The price reductions granted to clients and the creation of synergies by merging the SIS and Telekurs computer centres underpin this commitment.”