During the last 10 months, the names of UBS and HSBC have been mentioned on numerous occasions. There has also been a 10 per cent increase in the use of the word 'hubris' in the mass media, which has been used particularly in relation to Richard Fuld, the disgraced, extravagantly overpaid head of bankrupt Lehman Bros.

The eerie silence in Swiss banking has been broken by last week's events involving UBS and Credit Suisse. These are banking names well known to the Maltese rich, and whose brokers have been paying personal visits to this country for decades. They have in the past provided honourable financial service.

They are currently exhibiting a serious financial development and it is our duty to bring our clients' attention to it, as it is their survival which is at stake. Malta lives off its money, not on its agricultural produce.

UBS and Credit Suisse, whose combined capital is about five times the GNP of Switzerland, are both obtaining emergency funds to stave off the bankruptcy which is knocking at their doors. This is due to foolhardy investments in the US. The power distribution between banks and the state in Switzerland is uneven It is as if a dwarf were helping a giant to stand up.

It is well-known that Switzerland is a bank and not a country. Bankers count more than politicians there. To avoid any misunderstanding, at this stage we must quote the Financial Times' Paul Betts who, on Thursday, wrote: "But the Swiss cannot afford to be smug. At the beginning of this year, their biggest bank, UBS, seemed to be on the edge of a precipice. Its second largest bank, Credit Suisse, was also shaken by its exposure to the US, albeit not to the extent of its bigger rival. By luck or good judgment - a bit of both perhaps - UBS moved quickly to recapitalise itself and deal with its huge subprime-related problems. It raised more than $30 billion from new investors, its own shareholders and other devices. It recently announced a reworking of its business model and return to profit.

"The Swiss, of course would have been much happier had both UBS and Credit Suisse avoided their foolhardy investments in the US. That would have justified a little smugness rather than relief that the financial hurricane that hit Switzerland first moved elsewhere."

The article also stated that Switzerland, unlike its bigger neighbours, "has not had to come up with a massive national plan to salvage its financial industry. And the mood inside the country's big banks appears calm".

Betts' words have been given the lie by last Friday's tumultuous events. UBS, after receiving a $59.2 billion bailout from the Suisse government, had to endure, always according to Bloomberg, a client outflow. Credit Suisse has remained free of direct government assistance, raising 10 billion francs from investors, including the Qatar Investment Authority, which is already a major shareholder. It has not been possible at this stage for UBS to get a Sovereign Fund to help it, so it had to settle for a shareholding from the Swiss government. This will make it more difficult for it to grapple with regulatory and financial challenges, because its balance sheet exposures will obviously be broadcast, and US authority investigations for allegedly helping people evade taxes can be expected to have a greater weight, as it will be the American government dealing with the Swiss government.

There is going to be in the future, if it will exist at all, a very different UBS to that we all have known in the past. It will be under pressure to drop its integrated strategy and shrink its investment operations.

If UBS has gone a long way to recover the integrity of the position of its capital, it is currently failing miserably in its core operation - the retention of wealthy clients. It took a decision on October 2 regarding its investment division: it was clients, and not capital, who were to be king. This bold policy statement was well analysed by the FT. Clients, meanwhile, expressed their disdain for an investment bank managed by a bureaucracy and voted with their feet. There was an exodus of clients this week from UBS and $60 billion was withdrawn by yesterday morning.

It might not be the best of times for UBS, but it might be the best time for an investment in that bank. The share price of UBS has fallen from 60 to 16. This is probably an exaggerated downward reaction on the global investment public's part. UBS is indeed an investment opportunity which is difficult to evaluate. UBS is certainly not in the position of Goldman Sachs, out of which Warren Buffett has just made a massive fortune.

I feel it is my duty to paint a true picture, even if it sounds overtly optimistic to the true economic background against which the UBS saga is unfolding. The fundamentals of the global banking situation are far from desperate. There is vigorous co-ordination going on between the world's central banks and these include (officially a coincidence in which nobody has faith) the People's Bank of China.

The FT Lex Column's conclusion last Friday (which is by no means as distant from the hard core of the banking establishment as Bloomberg) is a very mixed one. It stated: "Switzerland's two banking giants may now be almost impregnable. They are also almost unrecognisable"

That is, UBS can no longer offer its old confidential banking service. Time for a new Switzerland to be created... in the Mediterranean perhaps?

Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S&P.

johnazzopardivella@hotmail.com