In spite of the Swiss private banks building up their assets managed, with a 4% increase on average in 2012, more than a quarter of them are likely to cease within three years, according to a study by KPMG and the University of St Gallen.
The University of St Gallen report showed that the situation is particularly critical for institutions holding less than CHF5 billion (US$5.3 billion) in client assets.
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According to the report findings, 13 private banks have closed their doors in 2012, bringing the total number in Switzerland to 148 due to liquidations hitting small institutions.
The global tax firm KPMG has estimated that another 25 to 30 percent of Swiss private banks will disappear in the next three years.
The report said that banks will need assets managed to grow by 8-10% to match their level of risk.
The report results revealed that nearly a quarter of the 103 institutions analysed experienced capital losses last year, and more than half of them reduced their employee numbers in 2012.
Larger firms were hiring, but smaller ones reduced staff, with 23% of the firms examined has reported a loss in 2012.
The study has concluded that well-performing markets and asset increases aren’t enough to overcome the challenges currently facing small banks, such as ongoing uncertainty about tax negotiations with several countries, including the US, as well as the state of the global economy and the regulatory environment.
