Swiss private banks with less than $5 billion under management will largely disappear due to the soaring cost of regulation, Bordier & Cie said.
“Margins are falling across the private banking industry in Switzerland,” Michel Juvet, 55, one of four partners at the company, said in an interview in Geneva this week. “Many of those firms are up for sale or merger.”
Switzerland’s 275 banks are facing a wave of consolidation as pressure on margins, partly caused by a U.S. tax evasion probe of their American clients, prompt foreign lenders to exit the market and smaller firms to seek a buyer. Royal Bank of Canada, Royal Bank of Scotland Group Plc and Morgan Stanley have exited the Swiss wealth market in the past year.
Bordier, established in 1844, has 10.4 billion Swiss francs ($10.8 billion) under management and is one of the few Swiss private banks where partners bear unlimited personal liability for commitments they enter into.
Firms that are big enough to survive are looking to buy local competitors, or purchasing banks and asset managers in the European Union to gain easier access to neighboring markets, according to Juvet.
“We at Bordier are open to look at private banks that are smaller than us but with good quality clients, compliant with the new international standards and interested in high quality asset management,” Juvet said.