EFG International has been forced
to change its leadership, replacing co-founder and chief executive
Lonnie Howell, as it battles rising business costs and falling
profits.
Howell is succeeded by John
Williamson, head of EFG in the British Isles, who has a mandate to
conduct a review of the bank’s future strategy, put a lid on
expenses and pursue growth more objectively.
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Extensive
autonomy
Howell and colleague Jean-Pierre
Cuoni, EFG’s chairman, founded the bank back in 1995. They used a
mixture of franchising and advisory consultancy, hiring advisers
and their book of clients and giving them extensive autonomy.
That helped the bank grow into a
power in Swiss – and international – private banking, accumulating
assets under management hit CHF85bn ($104bn).
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By GlobalDataBut a number of issues, including
the urgent need for cost-controls and a sliding EFG share price,
came to a head in late June when the bank was forced sharply to
revise a profits forecast downwards.
Based on year-to-date performance,
EFG now expects a core net profit of CHF140 to CHF 160m for 2011
versus the CHF200m target set earlier this year. The strength of
the Swiss franc had already made an impact on EFG’s performance for
2010, with profits falling 10% to CHF172m.
The profits warning coincided with
the announcement of the replacement of Howell.He will however
remain a significant shareholder of the bank, be a member of the
board of directors and carry out a number of roles, including
chairing the bank’s financial products arm.
‘Still want to
grow’
“Lonnie would carry on resolutely
investing [in growth] even in the midst of the financial crisis and
people were started to question that,” one EFG source familiar with
the strategic about-turn said.
“We still want to grow and post
strong net new assets but that can be done in a more disciplined
way.”
Williamson said that his
appointment marked a shift of EFG’s focus from growth, under
Howell, to earnings and value.
He said that the bank would review
each business and could exit certain less profitable
businesses.
“The focus of the review is not one
of disposal or other similar concepts, but on profitability,”
Williamson stressed.
Anthony Cooke-Yarborough has been
made chief executive of EFG Private Bank in the UK and Channel
Islands, replacing Williamson who will relocate to Zurich.
Meanwhile, EFG has also moved to deepen the ranks of senior
management talent. Gary Mueller is joining EFG as European head of
strategy from RBS Coutts in Switzerland. He will support Alain
Diriberry, EFG’s European chief executive.
