IG Group Targets Swiss Banking Business After Obtaining License

IG Group Holdings Plc, the U.K. spread-betting firm, is set to start operations in Geneva today, close to the private banks it hopes to win as customers.

The London-based company chose Geneva partly because many institutional customers it wants to do business with are located in the city, said Fouad Bajjali, chief executive officer of IG Bank SA, IG’s Swiss-licensed banking unit. The company also plans to target independent asset managers, family offices and retail clients.

“Time will tell whether” Swiss private banks “will have to open up to new products, to new revenue streams, or not,” Bajjali said. “Initial conversations are promising.”

IG Group says it’s the world’s biggest provider of contracts for difference, financial instruments that allow clients to bet on future movements of a security without owning it. It’s opening in Switzerland as foreign banks depart the Alpine nation amid increasing compliance burdens.

Bajjali said IG Bank is aiming to reach 13 million pounds ($21 million) to 16 million pounds in annual revenue over the next four to five years. IG Group posted 414 million pounds in revenue during its last fiscal year, ended May 31.

Individuals using IG’s trading products should provide as much as 70 percent of the firm’s revenue in Switzerland, with the rest coming from institutions, Bajjali said. IG Group already has about 2,000 customers in Switzerland who trade using the company’s operations in other countries, he said.

“We are probably not expecting to open as many accounts here as we do in other European countries,” Bajjali said. “But we do expect those accounts to be of higher value.”

‘Barbarically Competitive’

IG group also aims to win customers in Switzerland by charging less than its local competitors, which include Saxo Bank A/S, Swissquote Group Holding SA and Dukascopy Bank SA, Bajjali said.

“Our commission structures are very competitive for European rates already,” Bajjali said. “So in Switzerland, we are barbarically competitive.”

Last year, 10 foreign institutions ceased operations in the country, leaving about 120 remaining, according to the annual report of the Association of Foreign Banks in Switzerland released in May.

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