Credit Suisse has already had two bank runs and more assets could be about to leave.
Bankers a Julius Baer might have the last laugh. Although the private bank seemingly missed out on the so-called «Credit Suisse effect» in the first quarter, investors might have been looking at the wrong number.
Instead of looking at new money, they should have been looking at new hires. After all, Julius Baer did announce that it had hired nearly 40 new relationship managers since the beginning of the year.
Times of Turbulence
There is also a strong recruitment pipeline for the rest of the year, the private bank said, admitting that the momentum has been helped «in part by the recent turmoil in other areas of the industry.» The majority of the new client advisors have joined from Credit Suisse, people familiar with the bank have said.
Recognizing Julius Baer as being «well positioned to benefit from the impact of UBS's takeover of Credit Suisse» and profit from net new money inflows in the coming years, analysts at Zuercher Kantonalbank upgraded their recommendation on the private bank's shares to «overweight» from «market weight.»
Assets to Follow
As analysts know: first come the advisors, then the clients. Julius Baer chair Romeo Lacher recently described how this works in an interview with finews.com. «Client Advisors are considering leaving the bank for competitors,» Lacher said. «Once they are ready for the move, they will try to take their clientele with them.» Onboarding ultra-high-net-worth clients at the new place can then take well over months.
A «second wave» of outflows from Credit Suisse is looking likely, but seeing not as this wave could relate to invested assets rather than cash, it could take some time for the wave to roll in.
Almost every day, there are reports of experienced client advisors and even entire teams leaving Credit Suisse. Some competitors show little restraint in courting client advisors publicly. Chair of EFG international Alexander Classen, recently said in an interview with finews.com there was still one month left to bring former Credit Suisse employees on board.
Among the 50 client advisors EFG hired in the first quarter, 30 to 40 percent came from Credit Suisse, Classen said in the interview.
Coup at Lombard Odier
The private bank Lombard Odier, which is pursuing an expansion course in its home market under its Swiss market head Andreas Arni, has also repeatedly attracted people willing to leave Credit Suisse. By hiring the former head of Swiss private banking, Serge Fehr, the Geneva-based bank landed a coup and is expected to attract more top talent, especially in the French-speaking part of Switzerland.
In the meantime, away from the key banking centers, an entire private banking team from Bern is transferring LGT in summer. Likewise, in the Basel area and northwestern Switzerland, various employees are on the move. Credit Suisse refrained from giving comment to finews.com on request.
By all Means
The new owner, UBS, is anything but happy about this bloodletting. According to sources close to the bank, the heads of private banking at both banks are working with great urgency to prevent further departures. UBS, which had to take over Credit Suisse at the behest of the federal government and the authorities, is primarily interested in the latter's private banking. It will now try with all available means to keep client advisors at the combined bank.
This includes monetary incentives, while «bad leavers» at Credit Suisse are confronted with deductions on deferred bonuses.
Retention Measures
The next few weeks and months will show how well the retention measures are working. In recent years, both banks have moved away from having individual advisors look after wealthy clients. Instead, the task has been assigned to an entire team. This has made it much more difficult for bankers wanting to switch to take clients with them - not to mention the ever-increasing paperwork.
If this defensive wall at Credit Suisse also becomes porous as a result of the numerous changes, the second wave of client assets will flow unhindered to the competition.
