Swiss-based Rothschild & Co Bank is seeing large numbers of applications by advisors with impeccable portfolios, CEO Laurent Gagnebin says in an interview with finews.com. How does it go about choosing?
Laurent Gagnebin, Rothschild & Co Bank suffered a massive deterioration in performance last year. Profit fell more than 60 percent to 33.3 million francs ($35.9 million). What happened?
We had a significant structural impact as a result of the takeover of Banque Pâris Bertrand last year. If you looked at our results operationally, profit would be up 70 percent. We are very satisfied with that, not least given our extensive investment in the Swiss-based client advisor force.
Has the business benefited from last year's takeover of the Geneva-based bank?
We significantly expanded our business in the French-speaking region. Zurich and Geneva are now about the same size. We also benefited from the addition of the bank's business in Luxembourg. We now have far better access to an important market and it also allowed us to lay an important milestone in the institutional client business.
«It is pointless to speculate about that»
We want to build on that. Thanks to Hermance Capital, which we also acquired, we were in a position to expand our private markets offering.
Did you buy them at the wrong time? The businesses would have been cheaper if you had waited a few more months, particularly after interest rates pivoted and the market corrected.
It is pointless to speculate about that. We bought the bank out of a long-term conviction that it was very compatible with our Swiss growth strategy. The integration was smooth and we managed to complete it quickly.
We have noticed that the takeover has given us more momentum in the French-speaking regions, both when it comes to new clients and advisors.
The inflow of net new money was relatively low last year at about $1 billion, or about half of that in 2021. Did large clients leave or did the client advisors not bring enough in new relationships?
We suffered from the correction in the financial markets, as all other banks did. On the one side, it shrank the level of assets under management. On the other, clients became more cautious and restrained.
«We manage about $32 billion in client assets in Switzerland»
The $1 billion in assets that came with the acquisition were able to compensate for much of that and were a very positive factor in that context. Our expansion in Geneva and the new hires in Zurich puts us in a good position to grow further in Switzerland.
At the end of 2022, Rothschild had fewer assets under management than it did a year earlier. Do you still have the necessary critical mass?
We manage about $32 billion in client assets in Switzerland. On top of that, about $20 billion is booked here by Rothschild & Co group's overseas entities. We have enough critical mass in Switzerland. You have to look at the whole picture. Within the group, we have slightly more than $100 billion in assets under management.
Where do you intend to grow this year?
We invested a great deal in additional client advisors in Zurich. Most of them started at the end of 2022 or at the start of this year. We have also partnered with PensExpert when it comes to retirement solutions. As part of that, we also hired an additional retirement specialist.
«We are getting a large number of applications from client advisors with impeccable portfolios»
All of this will help us grow in the German-speaking regions. In the French-speaking regions, we will continue to benefit from the takeover of Banque Pâris Bertrand. We also want to grow in Germany, Spain, Luxembourg and Israel, all countries that belong to the Swiss entity.
The bank bonus season is coming to an end. Are you looking for specific personnel? What kind of profiles are you looking for? Are there any areas you are thinking of cutting?
As mentioned, we invested a significant amount last year. Now we are concentrating on the new advisors we hire, on retirement solutions, and on the institutional business.
We are getting a large number of applications from client advisors with impeccable portfolios that want to join us. If someone is a good fit, we will hire them.
Are you interested in more takeovers? If so, what are you targeting?
We are currently focused on growing organically. If there is anything interesting, we will look at it closely. But any takeover candidate has to get fully compatible with our culture.
How did the proportion of Swiss business develop last year after you hired veteran private banker Andreas Feller? What is your value proposition domestically, particularly in comparison to that abroad?
Switzerland managed to increase revenues by 31 percent. In our Wealth Management business, it lies on par with that of the UK. That is first and it shows that the Swiss growth strategy works.
«Our global advisory, or investment banking business, is very strong in Asia»
We emphasize an independent advisory service with a long-term perspective. That entails the structuring of international client assets and a strong family governance service.
Wealthy families and entrepreneurs with complex asset situations are well-placed with us. Clients also appreciate the exclusive ability to invest in private markets together with us.
That includes our merchant banking division. We also have a strong global advisory office that provides consulting advice to entrepreneurial clients when it comes to all types of financing questions.
The Rothschild & Co group is represented in a number of locations in Asia. What are your plans there?
Our global advisory business, or the investment banking business, is strongly represented. That gives the wealth management business excellent business opportunities. We haven't had offices there for about five years and instead concentrate on international clients coming from Asia.
Our main focus is on the European onshore markets.
There was a paradigm change in financial markets last year. Interest rates pivoted and inflation rose unexpectedly high in a number of countries. What do we need to pay more attention to now?
We expected higher volatility and uncertainty in the markets. Higher interests are fundamentally good for banks but they also entail more active management of the balance sheet, particularly when it comes to lending. That could be a challenge for some banks. But we are very conservative in that regard.
«Our country has shown itself to be very resilient again»
This year will be challenging in that interest rates could rise further. The inflation we are seeing does not seem to be short-lived. Still, we remain optimistic and we will continue to invest. We have been relatively lucky here in Switzerland. Our country has shown itself to be very resilient again.
Do you think things will change radically in finance? If yes, what impact will that have on the banking sector?
No. We are just on the path toward normalization. The years of negative interest rates and rising financial markets were not normal. Banks will have to learn again how to cope with this, while again working constantly to prove themselves.
Times of crisis, uncertainty, and volatility in the markets show which ones are closest to their clients and enjoy their trust. Digital solutions alone do not help. We need people with character to advise clients.
Laurent Gagnebin joined Rothschild Wealth Management Equitas in 2011, the Geneva-based entity of Zurich's Rothschild & Co Bank. Before that, he headed Investec Bank in Geneva. He entered the banking industry through Goldman Sachs, also in Geneva, after completing the École hôtelière de Lausanne and working in the hotel industry for a number of years. He has led Rothschild & Co Bank in Switzerland as CEO since 2016.
