EFG Bank, part of EFG International, is shutting its office in Lugano after having been present in the Swiss town for barely a year because it fears it will take too long for this centre to become profitable, the bank said today.

The closure of the Lugano office is part of a series of retrenchments by EFG International, which is selling businesses and streamlining operations to boost profitability in what has been a tough economic environment. At the start of the year, the Zurich-listed bank announced that it is selling its EFG Bank Denmark business to SEB Wealth Management.

“As part of a detailed review of its business, EFG International is in the process of streamlining its operations, and has concluded that it would take too long, given the prevailing environment, for the Lugano office to become profitable. Consequently, the office is being closed, and EFG Bank in Switzerland will focus its efforts on its well-established and successful private banking businesses in Zurich and Geneva,” the firm said in a statement.

As previously reported, EFG International is cutting staff numbers by up to 15 per cent and reducing its booking centres to take its cost-income ratio below 75 per cent over the next three years, while aiming to book net new assets of between 5 to 10 per cent per year. The bank has around 2,500 employees around the world.

Like other Swiss banks, EFG has also had to contend with the negative impact on revenues from the strength of the Swiss franc against currencies such as the euro and dollar. Swiss banks have also had to reshape business models as the traditional offshore style of Swiss banking has come under international assault from foreign governments.

As part of the global review, EFG Bank in Sweden, along with its Helsinki operations, will be shut. Asset management and non-banking businesses will be transferred to Quesada, EFG International's profitable Stockholm-based wealth management boutique. Offices in Dubai and Abu Dhabi are also set to be shut, subject to regulatory approval, though EFG International will continue to target offshore/non-resident Indian businesses in the region. A number of offices in Canada have been closed and a public float has been planned for EFG Financial Products.

EFG International has developed over the past 16 years to become a bank with SFr80 billion (around $85.5 billion) in assets under management, as at the end of June 2011. In its statement in October, the firm said private banking will remain its key focus, while EFG Asset Management will play an integral role in serving client relationship managers and clients.