St. Gallen's cantonal bank suffered a setback in its wealth arm in the first half, despite a rise in profits on the year.
Big clients pose a concentration risk:St. Galler Kantonalbank, or SGKB, learned that the hard way this year. The local government backed-lender lost a major institutional client, it said in a statement (in German) on Thursday.This led to the bank suffering a total of 700 million Swiss francs ($718 million) in outflows.
Despite the setback, the bank said its other new business developed well in the same period. Favorable financial markets boosted its managed assets to 44.3 billion francs, from 42.3 billion at year-end.
Spending Cuts
The bank appears in rude health: profits rose 1.1 percent to 82.5 million francs, mainly due to cost-cutting (a big budget for 150th anniversary festivities last year fell away). Its interest income rose 1.3 percent to 152 million francs, thanks to good loan growth.
SGKB also said it had paid 3.1 million euros ($3.5 million) to North-Rhine Westphalia, a state in western Germany which has aggressively pursued its tax-dodging citizens – and the Swiss banks which have helped shield them.
