SYZ & Co is one of the younger Swiss banks in a country full of venerable institutions, and its youth, the firm says, is a strength.

As Swiss banks have to figure out how to unload decades of baggage of being havens for illicit money, there is bound to be plenty of focus on what might be called “new Swiss” ways of earning a profit.

Enter SYZ & Co, a group comprising private banking, asset management and its Oyster funds business (providing UCITS-structured funds covering various asset classes and regions). It does no investment banking, such as underwriting debt issuance. A reminder of its activities came last week when the Oyster business announced another fund launch (see here.)

What is most striking about this firm is its comparative youth: SYZ & Co is a late teenager, founded in 1996, now with SFr35 billion ($39 billion) of assets under management. Unlike many of its peers nestling along the shores of Lake Geneva or the streets of Zurich, this business doesn’t boast the sort of history when banks were founded by men in wigs or cravats. And more vitally, it is young enough to have avoided an allegedly shady history. That means the firm – although it should never be complacent or cocky - hasn’t had a problem about assaults on offshore banks. (It has, however, faced litigation on other issues, such as related to investments in funds controlled by convicted fraudster Bernard Madoff. SYZ & Co has vigorously contested such claims, saying its exposure to Madoff was minimal.)

This publication, during one of its regular visits to Geneva, caught up with Ricardo Payro, head of communications. As of the time of writing, Payro is taking up the role of independent consultant and retains strong links with SYZ & Co.

Walking into the very modern-looking Rue de Rhône office (the firm has a total of 12 offices), there is a sharp and young look about it. For instance, there is a large model of a futuristic yacht of the sort SYZ & Co sponsors. To remind us of a focus on speed and grit, SYZ & Co sponsors endurance racing star Nicolas Prost, who was at Le Mans a few days ago (as was yours truly). Prost is the son of multiple Formula 1 champion Alain Prost. That’s plenty of caché to impress wealthy clients with.  

Talk of yachts and fast cars brings up the issue of performance. Payro said that right from the start, the firm has had to establish a clear track record for adding that sought-after “alpha” to client portfolios. It charges performance fees. This means that this privately owned firm, unlike a listed one with shareholders fretting about quarterly numbers, has the freedom to tolerate volatility in earnings if this means that a long-term record for bringing home results is set up.

“You have to perform and you can’t be average…you have to be the best asset manager but that often means you won’t always do things 'in-house',” he said, referring to the firm’s willingness to tap external managers for specialist skills.

“We outsource about half of the funds to the best asset managers available we can find,” he continued. Although outsourcing can be less profitable as a business model proposition at least in the short term, maintaining high performance is good for SYZ’s reputation with clients and hence its overall growth, he said.

A check on factsheets on SYZ & Co’s website about its Oyster funds reveals a range of results for number crunchers to analyse. One of the most striking, perhaps unsurprisingly given recent strong US equity gains, is that of the Oyster US Selection USD 2 fund, set up in March, 2012; last year, it logged a year-on-year gain of 34.9 per cent. The European Opportunities EUR fund logged a gain of over 19 per cent last year (this fund was created in June 1999), although along with many peers was hurt in 2008, at -45.1 per cent. The Global High Yield USD fund reported a 2013 gain of 6.7 per cent. Results on such funds are net of charges.

A teenager

“We are a bit different at SYZ – we’re a new bank,” Payro said, pointing out that the firm was founded in the mid-90s by three bankers, with Eric Syz remaining the sole owner of the firm and its CEO. The other founders were Alfredo Piacentini and Paolo Luban. Eric Syz began his financial career at Wall Street in 1981 before joining Geneva-based Lombard Odier & Cie in 1984, where he specialised in institutional asset management, mergers and acquisitions, engineering and promoting group products.

The bank’s youth means that unlike some of its rivals, it has no baggage about legacy issues: “Performance has become more important. This business is not about secrecy or tax evasion but about after-tax performance.”

“The combination is very balanced as each of these business lines has a different product cycle and volatility,” Payro said.

He further said that SYZ’s approach makes sense as policymakers at home in Switzerland and abroad insist, for example, on rules to make firms more open about their charges and fees to clients. Swiss and European rules (MiFID 2, etc) are squeezing the use of retrocessions, for example. In the UK market, where the Oyster funds range is increasingly familiar, the bank has to operate in a world now shaped by the Retail Distribution Review reforms on advisors.

“It will be difficult for a few years but models will adjust and banks will charge clients for selective advice,” he said. Firms in the middle ground will be squeezed, he said. “Really active managers who deliver superior performance will always be in demand, but so-called `closet-indexers' will have problems,” he said.

SYZ & Co’s logo may not be a household name on a par with some of the big gorillas of global wealth management, but maybe one reason is that the boats and cars that carry its brand go so fast that it is hard to keep up. And that, perhaps, is exactly what this bank is trying to achieve in setting down a reputation that investors respect. Other Swiss banks, take note.