Putting Zurich and London under the microscope

Zurich

Ray Soudah

Head of Swiss-based M&A consultancy Millenium Associates

After being severely, but not fatally, wounded in the spring of 2009, Switzerland will bounce back and rule supreme over all other international centres, including London, as the premier financial marketplace for wealth management service providers and clients alike.

When examining the support services and financial architecture of Switzerland, it can be observed and finally welcomed that a series of changes and fundamental improvements are in the final stages of being implemented, causing a reshaping of the financial landscape. This will result in a conducive marketplace in which to operate, creating an environment which is both stable and secure, in contrast to the lingering uncertainties London or other centres still possess.

Let us start with the legacy issue of “black” money which has plagued the centre for years and came to a crisis point in early 2009 when, in the midst of the global financial crisis, the G20 openly threatened Switzerland with sanctions for not yet conforming to the internationally accepted OECD compliance principles and procedures. The Swiss government and its regulatory bodies instantly agreed to ensure rapid adoption of these practices on behalf of their hitherto reluctant and powerful banking industry and without the prior consent of the banking community, which has since accepted the upgrade to the global OECD standard. This important message to the outside world was finally understood to mean that there was to be a correct governance separation between the state and the financial industry and that Switzerland wished to be a willing member of the “white” group of compliant countries.

The well-managed, timely and efficient rescue of the UBS by the Swiss state, and inter alia the whole financial industry, brought further focus on self improving and regulatory strengthening of banking governance. In addition, Switzerland can rightly claim it is nearly at the end of a process of regularising the tax status of banking clients viz a viz their home countries, with a multitude of bilateral agreements aimed at settling the harmful image of Switzerland as a tax haven for non residents. Those days are gone.

Let us now examine the capital strength of the banking industry in Switzerland. Its ratios are ahead of peers in many countries and the balance sheets are rid of weak assets.

Furthermore, recent proposals in front of parliament are strongly proposing a higher capital requirement, known as the “Swiss finish”. With stronger and more conservative capital levels, clients and service providers alike will draw comfort from operating in a secure system protecting all stakeholders.

Looking at sovereign risk and the stability of the political system and its consistency towards the banking industry, it is indisputable that Switzerland’s neutral policy and geographic location remains one of the most secure countries for banking. Annual changes in political oversight are rare and clients in particular favour the Swiss centre for their peace of mind and confidentiality.

Turning to the community of professionals available, in addition to the widespread multilingual nature of such, education and experience levels are significantly deep, allowing most service providers high confidence to support their clients with qualified staff. The surrounding community of lawyers, accountants and fiduciaries complements the marketplace and many a newcomer has had little difficulty in recruiting qualified personnel at all levels.

Switzerland will rise up and win the race to be the world’s leading wealth centre once more.

Sarah Dudney, Lockwood Gibb Associates

London

Sarah Dudney

London-based partner at Lockwood, Gibb & Associates, an executive search firm dedicated to wealth and investment management

Management gets your team to the line, leadership gets them over it,” admitted one senior London-based private banker recently in conversation to me on the topic of defining leadership. And so to our question: “Which has the most advanced leadership culture for fostering leadership in wealth management – London or Zurich?”

The narrative of leadership in its broadest sense is always given a Churchillian overlay of war-time street rubble and rhetoric. Leadership today can come in many forms, from Picasso to Lady Gaga to the charity group who run a soup kitchen at your local church. The defining characteristics have to be that this leader can influence perception of a discipline or a polemic.

In terms of translating this to wealth management, that person or team has to display transformational and proactive qualities which can give a wealth management business an impetus to pull together to bring off that deal or give a new perspective to that client’s relationship with their bank.

It is easy to argue that the cobblestones of Zurich and its sister cities are paved with the first and last word in wealth management. Switzerland is the country of refuge, of safe haven. In the “Swiss corner” their supporters will state that Switzerland has given us the partnership model of banking and the robust dynasty, whether that is the Lombard Odier or Pictet “family”.

In the London corner we can claim London as the city of traders which can be found in families like the Flemings, or indeed can emerge from a complete unknown with no previous history or connections in the city. There is a constant appetite for reinvention and an acceptance that talent can emerge from unexpected corners.

I would strongly argue that London, city of traders and entrepreneurs, may offer certain qualities which offer a distinct style of leadership. The talent pool in London offers a great spread of diversity at this current moment in time and one particular factor has emerged in the last five years. More and more women are leading private banking organisations. A press report late last year noted that a fifth of the top 20 ranked banks have women at the helm.

In the course of my own professional practice as a headhunter I recently ran a research study on this recent trend, conducting confidential interviews with a sample of senior women leaders in the UK. This is now a very distinct Anglo-Saxon trend. The number of women running private banks can be anecdotally correlated to how entrepreneurial their employers are and how prepared the board are to spread opportunity throughout their firm and organisational structure.

Contrast this if you will to Switzerland, where up to 10 years ago some can still recall organisational charts which simultaneously mapped Swiss Army rank to corporate rank. Today some women, both senior and junior, that I know in Swiss banking quietly talk of frustrating pay inequality – more so than is the case in London.

In any jurisdiction, be it in Asia, North America or here in Europe, leadership in wealth management is under immense scrutiny. That is the nature of crisis.

London is the city of reinvention. Private banking clients in the UK tacitly recognise this and are ready to back a new generation of leaders.