Zuercher Kantonalbank is planning to reorganize its private banking services next year, the head of its private banking business Christoph Weber said in an interview with finews.ch.
The average Swiss investor likes to hold cash and is regarded as fairly risk averse. For banks this isn’t the ideal constellation for boosting earnings in their investment business.
So it is against this background that Zuercher Kantonalbank (ZKB) has decided on a new set-up for its private banking investment arm in 2018.
«Clients will be able, according to their needs, to choose between asset management and consultancy mandates as well as execution-only. The conditions and service arrangements will be adjusted accordingly», Christoph Weber (Pictured below), private banking head and Deputy Chief Executive at ZKB, explained to finews.ch.
Novelty in Swiss Banking Banking Hub
The focus will thus be on the customer advisors. In future they will also benefit from the market analysis of ZKB’s Chief Investment Officer, Christoph Schenk. Up to now this service has only been available to clients with asset management contracts.
The most important innovation is that advisory mandate clients will be able to create their own investment portfolio, and compare it with a reference portfolio compiled by the CIO. In this way clients will be able to compare yields between their own, and the bank’s portfolios.
«In this way the client’s portfolio can be constantly monitored, and they receive the relevant trading recommendations from the ZKB», according to Weber, who claims this system would be a first for the Swiss banking sector.
Whether this expanded service will also incur higher costs was something on which ZKB wouldn’t elaborate. Details of the revamping will be released in the fourth quarter of the year.
Fidleg Requirements Taken Into Account
The banks’ advisory services also face two major regulatory hurdles, the first next year and a further one in 2019. Mifid in Europe and the Financial Services Act (Fidleg) in Switzerland. Swiss banks will thus have to tailor their advisory services for local and foreign clients accordingly.
The new legislation wasn’t the reason for ZKB’s reorganization plans, although they are expected to take the Fildeg requirements into account. The Swiss parliament is expected to discuss the Fidleg legislation in the autumn plenary session.
New Investment World
The revamping of the investment business fits in with ZKB’s strategy of moving clients in to the new investment world, Weber says. The core of the strategy is to convince clients that it is more sustainable to investment in a diversified portfolio than in single titles or sectors.
Like all banks, ZKB is looking to woo new customers with attractive advisory mandates, where they can then generate higher fees than in the traditional consultant or execution-only areas.
This is where ZKB, which presents half-year earnings on 25 August, has much room for improvement. The value of ZKB’s wealth advisory mandates reached 7.9 billion Swiss francs by the end of 2016, around 1 billion francs more than a year earlier. That represents just 11 percent in comparison with the total value of managed assets at ZKB. Weber put the total at around 70 billion francs in an interview with finews.ch in mid-2016.
