Local private banks are hiring whatever executives they can from UBS and Credit Suisse, leading to a job change frenzy. However, the institutions' behavior is by no means irrational.
The times when Lombard Odier cultivated a low profile among Geneva private banks are over. The Sunday press even writes about personnel changes at one of the most sought-after addresses in Switzerland for bankers willing to change jobs.
The tradition-rich bank succeeded in attracting executives not only from acquired Credit Suisse but also from UBS. Sabine Heller, designated regional director of UBS, moved to Lombard Odier in Zurich, replacing Andreas Arni, the previous head of the Zurich office.
Salary Packages Under Fire
The changes are not without criticism. In addition to Lombard Odier, the private banks seeking to profit from the takeover of Credit Suisse include LGT, Julius Baer, and EFG International, who are dangling exorbitant wage packages. Observers say this cannot be profitable for the banks, and the short-term hiring bonanza will result in a medium-term hangover.
One-Time Opportunity
But the question is whether medium-term planning plays any role at all at the moment. UBS admits the takeover of Credit Suisse offers once-in-a-generation opportunities, and those not seizing them are in danger of going away empty-handed. Every day the integration of Credit Suisse progresses, the window of opportunity for wooing away employees closes a bit more.
EFG's chairman, Alexander Classen, summed this up in May, saying there was a month left to recruit Credit Suisse staff. Their growth ambitions and the fear of missing out seemed to put medium-sized private banks in a hiring frenzy.
Pushing the Envelope
«There's currently a mood in Swiss private banking comparable to the crypto boom of a few years ago,» says Klaus Biermann. «Players are trying to push into the void left by Credit Suisse at virtually any price,» said the co-founder and partner of executive research firm Biermann Neff, a participant in the hotly contested market.
Biermann believes it's possible that seven-figure compensation sums are currently being paid for senior Credit Suisse staff. «But the high salaries shouldn't be understood as expenses per se,» he argues, but as investments to build future success.
Expertise in Demand
While investments were made in code and applications in Silicon Valley and blockchain protocols in Zug's Crypto Valley, the most crucial asset in Swiss private banking is in client advisors or bank executives able to provide complex services for a rich and super-rich clientele.
The latter expertise distinguishes those coming from major banks, among them numerous specialists working for years at the nexus between private and investment banking or corporate business. There, they've learned to design bespoke financial products and complicated asset structures for their clients.
Those wanting to lure wealthy private clients of Credit Suisse and UBS with asset management alone, they say, won't get very far.
A Downward Spiral?
So it's a matter of building these offerings as long as the talent is available and clients are willing to switch.
To be sure, UBS hasn't remained idle. It's luring Credit Suisse's top people with incentives and stepped-up retention measures among its clientele. According to reports, it's lowering fees to do so, a potentially momentous decision «That could lead to a downward spiral in revenues across the industry, which in turn would impact salaries,» Biermann points out.
Don't Hold Your Breath
Still, he sees reasons for the froth on the job market to subside. «The smaller and mid-sized and Swiss private banks are often in the hands of families and partners who have a lot of influence in the company and are entrepreneurial,» he cautions. «If the investment in personnel doesn't pay off, they take action relatively quickly.»
Received with much fanfare today, quietly exited tomorrow. Bankers currently arriving at smaller institutions and sometimes displacing veterans could one day suffer the same fate. The promised expensive salary packages will likely accelerate this development further.
Pressure to Succeed
Newcomers are under pressure to succeed from day one, especially since the rule of thumb in private banking is that if you can't take your clients to your new employer in the first three months, you'll fail later. Usually, 5 to 10 percent of clients follow an advisor, but in special situations like the demise of Credit Suisse, the bar is higher.
«It is to be expected some newcomers from the major banks won't reach the ambitious targets and will have move on or moved out on in two to three years,» Biermann expects.
The private banks hope that at least some of the seeds from the current poaching bonanza will have sprouted by then.
