Laurent Gagnebin is one of the new breed of Swiss bankers attempting to flourish without banking secrecy. The Rothschild Swiss private bank head tells finews.com what Swiss bankers need to learn, and how he plans to pip larger rivals.
Greeting his guests in his corner office overlooking Lake Zurich, Laurent Gagnebin eschews a tie – a departure in the cultivated world of Swiss private banking, where gravitas relies heavily on tradition and appearances. The 40-year-old is the son and grandson of private bankers, but didn't immediately follow the path.
Gagnebin spent his early years as a banquet manager in luxury hotels – he once had to tell a bride that the hotel has forgotten to order her flowers. For another, he conjured up a jukebox with Frank Sinatra songs at midnight.
«You learn to find a practical solution as soon as possible – you become a lot more practical than at university,» the native Vaudois and keen marathon runner tells finews.com in his first interview.
Remember to Think
A solar-powered Albert Einstein figurine, perpetually tapping his forehead – a gift from his daughters, to remind him to think – on his desk seems to attest to this.
Gagnebin left hospitality for banking fourteen years ago. He absolved a stint at Goldman Sachs' private bank in Geneva, which has since been shuttered, along the way. He has been head of Rothschild's Swiss private bank for eight months.
This is the first installment of finews.com's exclusive interview with Gagnebin. Click here for the second installment. His plans for Rothschild in Asia can be viewed on finews.asia.
Mr. Gagnebin, the profile of a typical Swiss private banker has changed immensely in the last ten years.
It has. In my opinion, the people who are not willing to adapt are going to have a very difficult time staying in the industry.
Switzerland doesn’t have a hard-selling culture.
We at Rothschild don’t sell, but we are looking for private bankers who are able to convert prospects into clients. I think most banks probably need to train their client advisors better at these relatively basic things. I was trained relentlessly in this at Goldman Sachs, we literally had months of simulation.
«Some think calling clients is degrading, or are accustomed to people calling them.»
It’s actually not that easy. Sometimes people are afraid to call. They think it’s degrading, and they are used to people calling to them instead.
That’s hard to find – people who can pick up the phone and get rejected 99 times but the 1 time they can get through, they get an appointment.
We think of the typical Rothschild client as quite elderly, cultivated, and very wealthy. Is that true?
Well, they are wealthy for sure (laughs).
If I look at the people we have taken on as new clients in the past couple of years, I would say the average age is probably 40 to 45. They are entrepreneurs, global people who travel a lot and who have made their own money – so its not inherited assets.
What can you offer them that other private banks don’t?
I’ve observed that they are, in a way, fed up at other banks because they feel like they’ve been constantly pushed products and sent term sheets of structured products for example, and they want to have a person who can provide them good advice, without any conflict of interest.
«Conflict-free advice is very difficult to find nowadays»
They like our name, brand, reputation, stability, independent and conflict-free advice. It’s actually very difficult to find that nowadays. I think we’re quite appealing for the new generation.
What specific initiatives do you have to win these new clients?
Rothschild & Co has been the number-one M&A advisor in Europe for the past eight years in terms of number of deals done, so that definitely helps. We know the private equity scene, we know about private companies being bought and sold.
How do you deploy the wider Rothschild then?
As a group we can invest in private companies: if the entrepreneur exits in a few years, he’s more likely to work with you because you also supported him when he was building his own company.
The wealth planning part is also important for entrepreneurs, obviously on a tax-compliant basis.
«Divorce, marry, kids have different passports – wealth planning comes in»
It’s more important because they are global, have assets in multiple jurisdictions, they may divorce, get married, their kids might have different passports and so on, so the planning bit is very interesting for them.
What about co-investing?
On one side we invest with our own money as I described before, but on other side, we give our clients access to to our merchant banking offering for private debt and private equity co-investments.
«It's not the same as raising money and charging clients a 5 percent fee»
So we can say, «hey, we have invested in this company. Would you like to co-invest at the same terms?».
It’s not the same thing as going to a client and saying, «We’re raising money, and taking a 5 percent fee, does that interest you?»
What’s the typical amount that you put into play?
Up to $10 to 15 million.
Let's talk about Switzerland: what’s your view of the country as an offshore center?
I’m very positive for Swiss private banking, but I think people have lived too comfortably for too long. They need to think about what kind of added value they can truly offer to their clients because banking secrecy, which was a big one, has more or less disappeared.
Private banks need to focus more on performance, more on service, and they need to pick their fights. Banks cannot offer everything to all of our different clients. Rothschild only focuses on a small part of the market, so roughly $5 million and up and only in a few specific countries.
«Swiss banks need to provide better service at a lower price»
As a country we have very good banks, well-trained people, people who speak many languages, good information technology infrastructure, a stable political system, a network of para-banking such as lawyers – I think that’s really difficult to replicate elsewhere.
The attractiveness of Switzerland is high, but people will have to work harder and provide better added value at a cheaper price than in the past.
When do you expect outflows from European regularizing their assets to stop?
At Rothschild we're already seen it stop, but we started a lot earlier than a lot of other banks – in 2009 the first time.
You had to speak to your clients many times for them to understand. I think that the new generation also played a role: the client’s son or daughter who is 55 or 60 didn't want to inherit a problem. They’ve also been pushing for regularizing their parents' affairs.
It's been a fairly long exercise and we are very happy to have finished it.
Did you find that some nationalities were more reluctant to regularize?
The automatic exchange of information is starting more or less everywhere, so clients don’t really have the choice.
Having said that, I think that there is always a bit of worry from people who live in politically less stable countries. They are concerned that once Switzerland sends their data to the local authorities, it might end up in the wrong hands, They’re worried for their security.
What about onshore Switzerland, which many of your rivals seem to be rediscovering?
It’s obviously very competitive. Our Swiss onshore book is actually pretty high: around 40 percent of the assets we look after out on Switzerland.
What are your assets in Switzerland?
Approximately 26 billion francs including custody assets.
The Swiss onshore market is hugely competitive and stagnating. Can you grow?
Yes, definitely. That’s one reason we are doing this entrepreneurial push because there is value being created in this area of the sector.
Aren’t all banks chasing these entrepreneurs?
That’s true. We have less than 30 clients per client advisor whereas another bank would have 300, maybe. So we effectively have ten times more time per client. That’s a big thing for an entrepreneur.
There’s also Rothschild’s global advisory, merchant banking opportunities, co-investing options, and wealth planning that I mentioned before.
Big banks would argue the same.
The big banks can finance a company, but maybe they cannot co-invest in the company and we can do the whole menu for entrepreneurs, and frankly I cannot see any other banking group which is so well-established.
How do you find the entrepreneurs?
In Switzerland for example, we’ve just announced that we’re sponsoring the venturelab event of the best top-ten Swiss start-ups, usually from the two technical universities ETH in Zurich and EPFL in Lausanne. I think this is a natural fit for us because it also allows us to get closer to these people and see what are the new technologies arising in Switzerland.
«We've already seen some exits from start-ups we've been involved in»
The Swiss market is a fantastic one for technology and entrepreneurship. There are many new companies around both Lausanne and Zurich being created and we’ve already seen some good exits, such as intel buying companies and things like that.
The 40-year-old Laurent Gagnebin joined Rothschild Wealth Management Equitas, the Genevan arm of Zurich-based Rothschild, in 2011. Prior to that, he ran Investec Bank in Geneva. He got his start in finance at Goldman Sachs in Switzerland, after working in the luxury hospitality industry for several years following his education at the École hôtelière de Lausanne. He succeeded Veit de Maddalena as head of Rothschild in Switzerland last July.
Laurent Gagnebin is the son of George Gagnebin, a Swiss private banker who was part of UBS' top management following its merger with Swiss Bank Corporation. Today, the elder Gagnebin is chairman of Geneva-based Banque Pâris Bertrand Sturdza.
- Click here to read the second part of finews.com's exclusive interview with Rothschild Swiss private bank CEO Laurent Gagnebin. His plans for Rothschild's growth in Asia can be viewed on finews.asia.
