Barclays Plc, Britain’s second-biggest lender by assets, said it’s committed to making its Swiss private bank profitable because the unit is crucial to increase business from rich individuals and families.
“There is certainly confidence and commitment to Switzerland,” William Oullin, chairman of Barclays’s international private bank, told reporters at a presentation today in Geneva. “I don’t see today Barclays carrying on with international wealth management without Switzerland.”
Client assets under management at the Swiss bank rose to about 25.5 billion Swiss francs ($27 billion) this year from about 23 billion francs at the end of December, including funds overseen from Switzerland and booked abroad, Simon Gaston, who heads Barclays Bank (Suisse) SA, told reporters today. The Geneva-based unit isn’t profitable, Gaston said.
While Switzerland is the biggest center for offshore wealth with $2.2 trillion, or about 26 percent of the market, according to Boston Consulting Group, some non-Swiss firms have quit the country as banking secrecy crumbles and the cost of regulation increases. Lloyds Banking Group Plc, Bank of America Corp. and ABN Amro Bank NV sold their Swiss private banks in the past two years.
Barclays said this month it plans to fire almost 100 U.K. private bankers as it controls costs. The company is exiting some markets to improve margins at the business known as wealth and investment management, which contributed 2.6 percent of net income in the first nine months of the year. The Swiss bank is part of that business, which oversaw client assets of 202 billion pounds ($322 billion) worldwide as of Sept. 30, according to a filing last month.
Profit after tax at Barclays’s wealth and investment management unit slumped 75 percent to 31 million pounds in the nine months through September, as the bank started to spend 1.4 billion pounds in an overhaul to improve future profitability, Barclays said last month. The Swiss unit is amortizing costs of investment and it will report a loss this year, Gaston said, without being more specific. It may post a profit for the fourth quarter of 2014, he said.
“We absolutely want a scaled wealth business,” Gaston said. “If any organization gives a sense to the external environment, whether that’s through media or to clients, that it lacks commitment, it’s signed its own death warrant.”
While the number of banks in Switzerland is falling and asset managers are seeking mergers to pool costs, Barclays isn’t for sale, according to Oullin and Gaston.
“Some of the players are in disarray and they don’t have the critical size or the scale,” Oullin said. “This is why we’re going to see further consolidation in the industry.”