As ex-Julius Baer boss Boris Collardi adjusts to life as a Pictet partner, what does the star Swiss banker’s move mean for the 213-year-old family partnership?
By Shruti Advani, Guest Contributor finews.asia
The hire of Boris Collardi as a partner at Pictet underscores the two poles of private banking: the Genevan wealth manager stands for the old world of conservative and risk-shy banking. The 43-year-old Collardi stands for aggressive hiring, bold deal-making, and fast growth. Pictet will have to relinquish its tight hold on balance sheet assets if its wants to successfully woo Asia’s wealthy, as finews.com reported on Wednesday.
The capital conundrum as well as liabilities like a criminal probe in the U.S. over tax evasion were the primary reasons that Pictet abandoned the Swiss-trademarked «banquier privè» model in 2014 in favor of a corporate partnership. This shifts personal liability from the partners pocketbooks into their (ample) equity. The move was seismic for a bank that claims its principles of ownership and succession have not changed since Napoleonic times.
Asian Tie-Up?
Without the constraints of unlimited liability, there are several options for Pictet to expand its balance sheet. It was on Collardi’s watch that Julius Baer bolstered its capital with bond issues in Singapore, the first of its kind for a foreign bank. The Pictet brand is «as good as gold» according to one investment banker who is not engaged by the bank. «Raising funds by floating paper would be no problem at all for an institution as well respected as it is» – it would be a first since Pictet was founded in 1805.
A more aggressive, if unconventional, approach would be to allow yet another outsider – such as a sovereign wealth fund – into the tight circle of manager-owners. One with a pedigree almost as impeccable as Pictet – GIC or Temasek for example – would be a match made in financial heaven.
Pictet only publishes outline financial results, but an outright sale would surely involve staggering numbers, even for the flushest of wealth funds. With $220 billion assets of the wealthy, Pictet’s private bank alone might be valued at nearly $4 billion, using a 1.5 percent multiple of book value. This valuation sits between the 1.25 percent Julius Baer paid for Merrill Lynch’s assets and the 1.75 percent ponied up by Bank of Singapore for Barclays Asian arm, and also includes a hefty chunk of goodwill.
Unit Spin-Off?
To be sure, Pictet’s partnership model is a major pull factor for clients – the partners view it as the firm’s «raison d'être». How would a deal overture go over in the «Salon», the meeting room where generations of Pictets have hashed out their decision-making by unanimous consensus?
Probably not very well – but then again, speculation in private banking circles that Pictet might open up underscores the jitters accompanying Collardi’s entrance. He has long advocated for a private bank to offer truly independent advice to its clients – an asset management division signifies an inherent conflict of interest. Could Collardi, for example, push Pictet to spin off its asset management arm, as Julius Baer did with GAM in 2009?
CEO Role?
And what of Pictet’s leadership, which has long been based on a first-among-equals principle instead of a CEO-led hierarchy. Like most banks, Pictet now needs a more visible public image to expand internationally – Collardi, who has grown to enjoy the limelight, can definitely help with that.
Senior partner Nicolas Pictet (pictured above) has summed up the culture at Pictet in client presentations for years, in a slide depicting a pyramid. At the pinnacle, the 62-year-old puts the bank’s staff and on either corner at the base he puts its clients and partners, respectively. The visual aid is meant to convey that Pictet’s owner-managers view themselves as the discrete, humble and sincere stewards of assets.
Pictet’s receptionist might rub shoulders with a partner on Switzerland’s impeccable network of public transport, for example. Collardi, by contrast, drew on his fleet of sports cars for his commute from his hilltop home overlooking Lake Zurich to Julius Baer’s Bahnhofstrasse offices. What will the venerable institution’s pyramid look like when Collardi begins wielding his influence?
This is the second installment of a look inside ex-Julius Baer CEO Boris Collardi's first days as a partner at Geneva-based Pictet. Click here to read the first installment of the story.
