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7. Lurking Lombards

Writing loans with securities as collateral – the business of Lombard loans has boomed for Swiss banks in recent years. Julius Baer, which reported a rise in profits two weeks ago, is the latest bank to see its credit book mushroom.
If markets continue to fall, the Lombard loans become a ticking time bomb. Banks will require their clients to make up for the drop in value at certain pre-set levels with additional cash. Margin calls like these are often the starting shot for bitter legal fights that have done little for the image of banks as trusted partners.

8. What’s Advice Worth?

A rollercoaster in financial markets is a chance for private banks to show the beefed-up advisory arms they have been touting in recent years. Banks like Credit Suisse have poured money into hiring well-known prophets to flesh out a «house» view of markets and how clients could or should respond. UBS has launched an in-house digital tool which monitors portfolios against market swings overnight and prompts private bankers to get in touch with their clients.

The end result is meant to be a cozier relationship: instead of just pitching the next big thing in small- and mid-cap stocks, bankers are supposed to be in tune with their clients’ bigger picture and adapt their suggestions accordingly. Swiss bankers concede this will take years of homework. The turmoil in financial markets is the first chance to see who has done theirs.