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One year ago, Swiss private banking
was in the middle of a crisis. Now it is returning to health. Even
UBS, which suffered outflows of CHF248bn ($254bn) since 2007,
registered net inflows last month.
Jacques de Saussure, managing
partner at Pictet, believes that the nightmare scenarios painted
last year, with Swiss private banks in the full glare of the
Organisation for Economic Cooperation and Development spotlight,
appear to have overblown.
Last year Switzerland agreed to
sign tax exchange agreements with at least 12 other countries in
order to avoid being blacklisted as a tax haven. Secrecy, one of
the key tenets of the Swiss industry, had been declared dead.
“It was probably less important
than people imagined, because we [Pictet] had a well-developed
institutional business and our wealth management division is very
international in focus,” says de Saussure.
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By GlobalData“Last year it [the OECD drive to
crack down on tax havens] was a factor. But it has not had a huge
impact on us.”
Tax exchange
agreements
One of the big concerns was the
impact tax exchange agreements between Switzerland and the US would
have on clients. Pictet has provided a mechanism for US clients to
declare undeclared funds to the US authorities, and de Saussure
says it had kept many of its US clients as a result.
It is a registered investment
adviser with the US investment regulator, the Securities and
Exchange Commission, and continues to deal US securities on behalf
of clients – in contrast to some Swiss banks, notably Zurich-based
Wegelin, which decided to stop dealing with the US altogether.
Investor concerns have moved beyond
secrecy and are now focused on other areas where Swiss banking is
typically strong. In particular, the much talked about currency
wars between western economies has placed an emphasis on capital
preservation among investors.
‘Confiscation’ of investor
assets
De Saussure says the threat of
inflation and the implementation of trade and capital tariffs
amounted to the “confiscation” of investor assets.
Banks in Switzerland, because of
its economic stability, political neutrality and reputation as a
safe haven for assets, could help mitigate some of these problems,
he adds.
Discretion is another important
pillar of the Swiss private banking culture. That holds true
whichever jurisdiction they operate in, according to Heinrich
Adami, head of Pictet’s UK and German businesses.
“There are certainly challenges in
Switzerland, but we should not underestimate the number of clients
based in the UK,” Adami says.
“London is still the preferred place to do business for many of
these. Not everyone wants everybody else to know how much money
they have. This is a very small point, but one which is respected
by Swiss banks.”
See also:
Swiss franc strength a double-edged sword
