The Luxembourg wealth manager’s Swiss bank widened its losses in the first half, according to data seen by finews.com. It is a case study in gaining a toehold in the largest market for offshore wealth in the world.

The Zurich-based Swiss bank of Quintet posted a net loss of 16.3 million Swiss francs ($17.8 million), from 9 million francs in the first half of 2020, according to a profit-and-loss statement posted in Switzerland’s commercial register.

The deepening losses provide vivid color to the Qatari-owned private bank’s efforts to establish itself in the largest offshore market in the world in the midst of a pandemic. Fuelled with hundreds of millions in funding from the al-Thani family, Quintet is hiring bankers at a brisk pace – but can’t always retain them, as finews.com reported last week.

Lending Balloons

In Switzerland, the bank started last spring with just 40 employees as well as a license thanks to the acquisition of Bank am Bellevue. Of the 60 people it has since hired, roughly one-third are private bankers.

The Swiss bank lifted its assets to 2 billion francs, which includes 200 million francs in fresh money. This translates to a growth rate of well north of ten percent against existing – very modest – assets. Its loan book rose by more than half, said Quintet, which reported 8 million francs in mortgage lending on its balance sheet.

Family Backing

The Swiss losses are «fully supported through the strong financial backing» of its parent during a building and investing phase, Quintet Swiss CEO Emmanuel Fievet said. The emirate's ruling al-Thani family is seeking to breath new life into the parent wealth manager, which it bought from troubled Belgian bank KBC in 2011 for 1.05 billion euros ($1.25 billion).

Quintet is struggling to grow in a wider wealth market that is booming: larger Swiss rivals like Julius Baer and UBS recorded higher profits driven by their business with the world's wealthy. Larger banks are outpacing smaller ones, widening the gap between the two, according to a KPMG study. 

Qatari Interests

Parent Quintet narrowed its net loss to 20.3 million euros ($24.1 million) by more than half in 2020. Known as KBL until last year, Quintet manages 85 billion euros overall, including in Switzerland. It is run by CEO Jakob Stott, who took over last year following the sudden death of CEO Juerg Zeltner to a terminal illness.

Quintet took in 112 million euros from the al-Thanis last year in order to finance its revival and expansion. Qatar's sovereign wealth fund is the largest investor in Credit Suisse, which took an emergency infusion of cash including from the emirate earlier this year.