Switzerland's dwindling private banking is under pressure to return to growth, and firms are undercutting each other on client focus. Can this be reconciled? No, some private bank bosses say.
Identity crisis and feeble growth – the twin pillars of Swiss private banking at the moment. Without tax evaders to bolster lucrative offshore accounts, net new money has fallen dramatically.
Industry consultants are prescribing international expansion, acquisitions – or both, as finews.com reported. Eat or be eaten is their mantra: only the big and strong will survive, small private banks will wither.
In the Best Interest of Clients?
The same consultants also preach for private banks to ruthlessly adapt their models to the needs of their wealthy clients. Putting that into practice leads to a conundrum: if a wealth manager follows the «growth and deals» mantra, it is not acting in the best interest of its clients.
Peter Raskin (pictured below), CEO of Swiss private bank Bergos Berenberg, highlighted this contradiction in a media briefing. The wealth manager is young, having split from parent Berenberg in Hamburg last year. A group of weighty investors including businessmenMichael Pieper, Adrian, and Andreas Keller – bought the majority of the Swiss unit.
Bergos Berenberg wants to grow, of course, he said – it is the private bank's mandate. But the new owners are demurring on deals in favor of building assets organically.
«I don't think growth at any price is the right thing to do,» said Raskin, who also took a stake in the buyout. The comment fits with what executives at larger wealth managers would likely agree with.
Big Name Takeovers
In reality, wealth management's recent history has been marked by deals: major ones like Julius Baer's 2012 acquisition of Merrill Lynch outside of the U.S. (the Swiss bank had to tap shareholders for an extra 500 million francs to pay for it). The acquisition alone cost 720 million, and the integration millions more.
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