Bringing a total banking system to the regions

Even before Swiss secrecy was dealt a hammer blow by the US authorities’ pursuit of names of tax dodgers and G20 attacks on fiscally-friendly jurisdictions began to bite, the world’s premiere wealth management houses were already developing alternatives to the “offshore” model for survival and growth. The main strategic change has been the search for clients in the regions of European countries, whose assets are booked and managed locally, according to the home jurisdiction’s laws and regulations. “This has been a strategic initiative from Credit Suisse, globally,” says Ian Marsh, recently installed UK CEO for the Zurich-based bank. “The focus on banking onshore is very important for us, and especially here in the UK.” The latest additions to Mr Marsh’s network of regional offices has been the opening of private banking branches in Manchester and Birmingham. “We are looking to grow our UK onshore business aggressively,” he says. But London remains the preferred second home for foreign nationals who want to keep their assets in Zurich or Singapore. Although he does not expect the growth of this business to be so explosive, his teams are still actively touting business from those families in the Middle East and Russia, who have natural economic interests such as property or schooling for their children in London. Mr Marsh is reluctant to specifically discuss the needs of London’s growing coterie of wealthy Russian oligarchs who have fallen out with the Putin-Medvedev axis in Moscow, but admits that these types of clients remain a target. “In a number of international markets our banking platforms in Switzerland and London look very attractive for clients seeking political and economic stability,” he says. Tax is not an issue with these types of clients, who are looking for the quintessential “Swissness” of an institution to handle their money safely. Although Credit Suisse’s private banking clients are believed to generate the highest margins in the industry, with an average profitability of 125 basis points across the institution globally, the margin in a predominantly onshore location is much lower than this, due to costs of large numbers of offices and in-demand customer relationship managers (CRMs). Clients need a minimum of £1m (E1.1) of investible assets to qualify as a high net worth customer, with Mr Marsh’s CRMs looking for people requiring what he calls “total banking systems”, encompassing asset management solutions, mandates in alternative investments, financing and M&A advisory work. the integrated model Those clients with a business can be offered advice from analysts at Credit Suisse’s investment bank about positioning or selling their business, while those with spare cash to invest can be guided through the options when it comes to making a purchase. Mr Marsh believes this integrated banking model, combining investment banking, private banking and asset management – introduced by Ossie Grübel, who has recently been installed at the helm of UBS – is the key selling point of the Credit Suisse offer. JPMorgan has expertise in handling structured products and Goldman Sachs has good experience in certain segments, particularly the ultra-wealthy, but he is sceptical of any other player’s ability to provide a “one-bank” solution in the UK. “Very few places do what Credit Suisse can on such a broad scale with an integrated banking structure,” says Mr Marsh. “There are countless examples where we are working across two or more divisions to help a client.” Mr Marsh has not yet bought any discretionary wealth managers in the UK, unlike rivals UBS and Deutsche Bank, but there is pressure from Zurich for acquisitions in wealth management, so it would be a surprise if Credit Suisse was not running the rule over any operations which come under the hammer. He is certainly expecting consolidation in the UK. After what Mr Marsh refers to as a “pretty bloody first half” of 2009, net inflows have returned to his bank. And he is clearly buoyed by recent hires from rivals UBS, following the loss of three senior bankers to Deutshe Bank, shortly after his arrival. But the new recruits have not come cheap, and mean a close eye has to be kept on the business model and asset flows. “We are beginning to see good inflows,” says Mr Marsh. “But the recruitment market is very hot. In London, the price of talent is always high, however bad markets are. But it is surprising how high it has gone in the recent months of recovery.”