Banking with Russians is a volatile affaire giving the political imponderables. But Switzerland has a central role to play.
Bankers court them vigorously, but nobody likes them much: this pretty much sums up the relationship between Western bankers to their Russian clients. Rich Russians are attractive prey for banks for sure, but at the same time, the companies are being kept on their toes by risks inherent to this lucrative business.
Some of the assets brought to the West were earned through questionable, indeed at times criminal means, which compromises the reputation of the banks managing such assets. The money laundering cases which recently caught headlines, not least involving Nordic banks in the Baltic states, provided ample proof.
Honest Russians?
The concern about tainted Russian money may over time become less well founded, if we are to belief the findings of a joint study by the Russian property brokerage Tranio and conference organizer Adam Smith Conferences. The percentage of rich Russian who revealed assets held abroad to the Russian taxman reached 58 percent in the past year, up from 42 percent a year earlier.
They used the offer of a tax amnesty (71 percent of respondents) or closed financial firms held abroad (73 percent).
Worried About Corbyn
Of course, many Russian still want to have at least part of their vast wealth in safety – abroad. Their pick of financial market is also revealing: while Cyprus was the preferred option for a while (with 52 percent of the surveyed favoring this country), many Russians now have opted to move, following the pressure exerted by the Americans on the tiny nation following the banking crisis in 2013. Four out of ten Russian are now opting for Switzerland, the traditional safe haven.
London also scored highly among the Russian financial elite, but concern about the country’s future is mounting – with Brexit looming and the possibility of a far-left takeover in the shape of Jeremy Corbyn’s Labour Party. Credit Suisse also voiced its concern about such issues.
Switzerland: Super Rich Pull
The very rich Russians (with 50 million Swiss francs or more) are favoring Switzerland, Luxembourg or even the U.S. The average rich by contrast are attracted by the warmer climates of the Emirates (mainly Dubai), Malta and Singapore. The choices tend to depend on their ability to open a bank account in the first place.
Know-your-customer rules guiding the acceptance of new clients is making life tougher for the Russian rich, according to two thirds of the polled. Many banks have adopted a very forceful approach against this type of client – even if the frequency of money-laundering scandals may suggest otherwise. But these individual cases make life very hard for the mass.
Lucrative Russia Desks
There is no such thing as a scandal-free future – but, lucrative business with Russian clients is still to be had. Otherwise, Swiss private banks wouldn’t maintain such prominent Russia desks. More clients than ever (15 percent) also show an interest in so-called club deals. Investments projects that are open to between five and fifteen clients only.
