The writing had been on the wall: J. Safra Sarasin, the Brazil-Swiss bank, will no longer offer its private-banking services in Germany.
As early as Januar, finews.com reported that J. Safra Sarasin was about to pull the plug in Germany, citing several sources. The company didn’t want to communicate the closure of its private-banking business in Europe’s largest wealth-management market at the time and kept the line throughout February.
Last night, the company came clean and said in a short statement that the bank had «finalized the review of the private banking business strategy and profitability in Germany» and decided to no longer offer private-banking services in the country as it lacked the critical mass, represent less than 1 percent of the group’s assets under management.
Small Fry
J. Safra Sarasin has 148 billion Swiss francs in assets under management. With an amount of less than 1.5 billion francs, J. Safra Sarasin will indeed have been too small to make much of an impact in Germany. And yet, the company had a staff of about 80 people to finance in the country.
The bank, true to its discrete tradition, didn’t comment on the future of its bankers in Germany nor about what will happen to the five branches in Frankfurt, Hamburg, Hanover, Munich and Stuttgart.
No Redundancy Plan?
Germany’s «Private Banking Magazin» said that the local chief executive officer, Thomas Reeg, was mandated to close down the business in the country, adding that almost all employees were going to be released by the end of June and September respectively. The staff are not organized in a formal employee representation and may not receive the benefits of a redundancy plan.
J. Safra Sarasin simply says that its decision won’t have an impact on the institutional and wholesale business (ICWS) in Germany, to which it remained fully committed. The bank added however that it will «optimize» its German operations by opening a branch in Luxembourg.
The branch will enable the company to operate its ICWS business under the «European Passport», enabling clients to continue to profit from the global expertise of the J. Safra Sarasin Group, its financial and capital strength and its comprehensive range of services, the bank said. In other words: A physical departure from Germany.
The End of an Era
The statement thus marks the end of a ten-year-campaign by Bank Sarasin and later J. Safra Sarasin to establish its business in Germany. The bank managed two profitable years in all those years – in 2010 and 2011. The German unit in 2015 had a loss of 8.8 million euros.
Low interest rates, increased regulation since the financial crisis and a reluctance of customers to invest their cash made it difficult for Sarasin to develop its business in Germany.
Cum-Ex and Windreich
The bank’s fortunes weren’t helped by its role in the «Cum-Ex» scandal, where it was one of the companies to actively offer the much-maligned products to its customers.
J. Safra Sarasin’s reputation was further tarnished by the fallout from the failure of the Germany windfarm company Windreich. The bank had provided the company with a loan of more than 70 million euros, simultaneously selling its customers bonds in Windreich – even when the company already was facing financial difficulties. Some of its clients sued the bank for compensation.
J. Safra bought Sarasin in 2013.
