Rain clouds dampen Swiss celebrations
UBS’s jubilant announcement of a 21 per cent increase in wealth management profits belies the fact that all is not quite right in Helvetia.
The latest results from Swiss banking giant UBS have been welcomed as signifying the
official end of the bear market. UBS’s wealth management profits were up 21 per cent on last year, with net new money over the last 12 months totalling SFr23.3bn (E15bn), compared with SFR14.9bn for the previous year.
While UBS denied traditional Swiss banking was taking a back seat – it still accounts for a third of assets under management – the new focus of wealth management is clearly paying off. It is clear that non-Swiss business is more important going forward. This was demonstrated by UBS’s recent purchase of Merrill’s German private client business (see page 8).
Other Swiss banks are careful not to get carried away with any euphoria. They are conscious of many threats to their home and offshore markets. Every year the Swiss Bankers Association (SBA) sends a small coterie of key individuals on the road to assure potential clients in Milan and London that everything is hunky-dory in Zurich.
“Swiss banks are accused of being secretive and trying to avoid being involved in any debate,” SBA chairman Pierre Mirabaud told PWM in London. “So we say, here we are! We are open and wish to share our experience in private banking.”
Part of this includes the tradition of providing open architecture solutions. Mr Mirabaud says his own private bank – Mirabaud & Cie – started selling the products of external groups 35 years ago. But attention is being drawn to this now in a bid to counter criticism that Swiss banks do not focus on clients’ needs.
European Union threats to Swiss banking privacy are also dismissed by the SBA. Switzerland has offered to introduce a tax on interest, in exchange for keeping secret the names of EU-based account holders. Mr Mirabaud calls this a “very generous offer”. Leakage of assets due to Italian tax amnesties is also played down, with the SBA claiming that 85 per cent of Italian assets never left Switzerland, and those that did are coming back.
Yet even the SBA cannot deny that Switzerland is overbanked and that further staff cuts will be necessary. The next threat may be a political one, with the right-wing SVP having made significant gains during the October election on an anti-foreigner platform.
The SBA laughs off any notions of political extremism, yet has spent several years trying to educate SVP leaders on the need for “stability in an economic and political sense”.
