UBP chief rejects claims that Swiss private banking is dead

Reports about the death of Swiss private banking have been exaggerated. That, at least, is what Guy de Picciotto is arguing.

The chief executive of Union Bancaire Privee, which last month expanded its assets under management by a third with the purchase of the non-UK operations of Coutts from Royal Bank of Scotland, believes Switzerland still has plenty to offer clients.

"The high level of expertise we have, as well as the stability of Switzerland and its low debt levels, still make it an attractive place as a custodian of wealthy people's assets," Mr de Picciotto told the Financial Times in a rare interview.

The 54-year-old son of UBP's founder and chairman admitted that Swiss private banks have taken several knocks in recent years, including the erosion of the country's banking secrecy law, the appreciation of its currency and low interest rates.

This has led rivals to predict that the harsher environment will lead to the demise of Swiss private banking - a claim made most recently by the head of Abu Dhabi's international financial centre.

But even as the US and Western European markets were tougher for Swiss private banks since agreements were reached to share data on clients from those countries with their governments, Mr de Picciotto said other markets are taking up the slack.

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Once the world's biggest investor in hedge funds, UBP was hit by the Bernard Madoff scandal in 2008, for which it paid a $500m settlement. Since then it has offset the sharp decline in its hedge fund investment business by bulking up its private bank, notably by acquiring the Swiss operations of foreign lenders, such as ABN Amro and Lloyds Banking Group.

Mr de Picciotto, who became chief executive in 1998 a decade after joining the family business, said UBP would "pause" acquisitions for at least a year while it integrated the Coutts assets.

He added that the flow of foreign banks selling their Swiss businesses was drying up, although he expressed doubts about the commitment of France's BNP Paribas, Societe Generale and Credit Agricole, which all own top 25 Swiss private banks.

"Who knows with the French," he said. "I think the trigger for consolidation will be the pressure on cost-income ratios. We will definitely be one of the consolidators."

The Geneva-based bank's acquisition of the non-UK operations of Coutts from RBS will expand its existing assets under management by SFr32bn to about SFr130bn. About 40 per cent of the new assets are for clients in Asia - giving its nascent operations in the region a big boost - and the rest are in Europe and the Middle East.

< > "Coutts gives us a base from which to grow and build in Asia," said Mr de Picciotto. "Starting from scratch as we did three years ago in Singapore makes it difficult."

However, Mr de Picciotto said that about a fifth of Coutts clients were likely to leave the bank during the move to UBP. "There is always some attrition. But we will offer a retention package to the relationship managers to try and keep as many as possible." James Buchanan-Michaelson, who ran Coutts's Geneva office, has already left to join Barclays.

UBP will transfer about 1,000 staff - mostly relationship managers and product and services teams - from Coutts, half in Europe and the Middle East and half in Asia. This will almost double the bank's workforce from its current level of 1,300.

The Geneva-based company prides itself on having one of the leanest structures in Swiss banking with a cost-income ratio of 67.1 per cent last year - well below that of bigger rivals UBS and Credit Suisse. To preserve this, Mr de Picciotto said "some adjustment of costs" will be needed in the Coutts operations.

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