It may sound paradoxical: While big banks such as UBS and Credit Suisse are about to pull out thousands of their employees from London in reaction to Brexit, Swiss private banks are busy expanding their workforce in the City. Why this is and what the future is likely to bring.
UBS, Switzerland's biggest bank, is mulling the elimination of up to a thousand jobs in the City in reaction to the impending departure of the U.K. from the European Union.
Arch-rival Credit Suisse (CS) meanwhile is finalizing plans to expand operations in Dublin, the Irish capital. The company had first moved to the country of James Joyce and Guinness beer a year ago as costs are significantly lower in Ireland.
U.S. rivals Goldman Sachs and Citigroup are thinking about a move to Frankfurt, while HSBC may send up to 1,000 of its traders across the channel to Paris.
Access to the Rich
The strategies of the private banks of Geneva stand out in marked contrast – in particular those of the two big players Lombard Odier and Pictet. The spokesman of an unidentified private bank told «Le Temps» newspaper that London was unique in Europe due its access to rich Asian clients.
It is for that reason that the private banks are investing in their London operations. Pictet for instance added 24 private bankers in London last year, raising the total to 307. This year, the company intends to increase its workforce by a further 7 percent, a Pictet spokesman told «Le Temps».
What Brexit?
Rival Lombard Odier, which currently employs some 120 private bankers in the City, aims to boost the number of bankers by an average 5 percent a year.
Mirabaud, another private bank based in Geneva, has no plans to leave the U.K. capital either. Its spokesman told the newspaper that the growth strategy in London wasn't affected by Brexit. It has about 130 private bankers in London. Union Bancaire Privée and Banque Syz also denied they were planning to shutter operations in London.
Non-Dom Tax Regime
London has long been a preferred hub for seriously rich families. Mainly because of the «non-domiciled» tax regime, a system akin the Swiss flat-rate tax for rich foreigners.
More than 50 billionaires currently are based in London, the biggest congregation of such extremely wealthy people in Europe. Furthermore, the city is home to half a million multi-millionaires – making London a bonanza for private bankers.
Change Is in the Air
The 200-year-old privilege is about to undergo a reform though. Starting in April, the U.K. will revoke the status of «non-domiciled» – prerequisite for the beneficial tax status – if a person has spent 15 of the last 20 years on the island. Analysts say that the reform may prompt some of the super rich to leave the country.
It seems that the private banks from Geneva don't worry that much and even plan to expand their business in the City.
The one exception is Banque Privée Edmond De Rothschild Asset Management. The bank said at the beginning of the year that it planned to leave the U.K. and to concentrate on its operations in Geneva, Luxembourg and Paris instead. It will retain its hedge-fund business in London.
