Swiss bankers need to work harder to fend off competition for the country’s $2.3 trillion of foreign client assets, according to the chief executive officer of Julius Baer Group Ltd., the country’s third-largest wealth manager.
“If we want to maintain the lead, if we want to be the best private banking culture, history, tradition, the players who work are going to have to work really hard,” Boris Collardi, 39, said today at a meeting of the Swiss-American Chamber of Commerce in Zurich.
Switzerland has amassed one third of the world’s offshore private wealth and is home to two of the world’s five largest wealth managers, UBS AG and Credit Suisse Group AG. As the nation’s financial secrecy laws crumble amid a move toward a global standard of information exchange between tax authorities, other jurisdictions are eyeing the wealth held in the Alpine country.
“Other financial centers are in competition with us,” Collardi said. “London wants a piece of the cake, Singapore wants a piece of the cake. Now the new one is Panama that wants a piece of the cake.”
Swiss banks that want to survive need to increase their assets under management to help absorb new regulatory costs, diversify their customers beyond traditional western European countries and implement a strict focus on certain markets where they can be successful, according to the CEO.
Hong Kong and Singapore have a combined $1.4 trillion of offshore wealth, while the Caribbean and Panama have $1.2 trillion and the U.K. holds $1 trillion, Boston Consulting Group said in a report on June 9. Switzerland has 435,000 millionaire households, ranking fifth behind the U.S., China, Japan and the U.K., according to the report.
Collardi urged bankers attending the lunchtime event to return to the office rather than have an “apero in the sun,” or drink, as they’re competing with the “best-educated, hardworking” financial workers in Hong Kong and Singapore.
Julius Baer is boosting assets by absorbing non-U.S. Merrill Lynch wealth units acquired from Bank of America Corp. The integration, which began in the first quarter of 2013 with Merrill Lynch’s bank in Geneva, accelerated with the addition of units in Hong Kong and Singapore. Julius Baer has said it expects the transaction to add client assets toward the lower end of a range of 57 billion francs ($64 billion) to 72 billion francs.
The proportion of total managed assets from emerging markets at Julius Baer is approaching 50 percent, with almost one quarter from Asia, Collardi said. For new customers of Swiss banks, “the moral compass has changed” and they no longer expect banks to take assets undeclared to tax authorities, he said, adding that Julius Baer expects all European clients to be tax compliant by 2015.