The Sarasin Group said operating income in the first six months of 2012 had fallen 9 per cent from a year before to SF330.3 million (around $337.9 million), as tough economic conditions in the eurozone hit client investment activity.

The Sarasin Group, the Swiss bank now mostly owned by Brazil’s Safra Group, said operating income in the first six months of 2012 had fallen 9 per cent from a year before to SF330.3 million (around $337.9 million), as tough economic conditions in the eurozone hit client investment activity.

Among other features from the bank’s results, issued today in a statement, were comments on how the bank was moving its business model to accept only fully tax-compliant clients, as the firm adjusted to international pressure on the traditionally secretive Swiss banking system.

Income from commission and service fee activities declined by 13 per cent year-on-year to SFr202.3 million. Net interest income was more robust, but still fell by 6 per cent to SFr70.3 million over the period, Sarasin Group said today in a statement.

Income from trading operations was SFr46.1 million (-10 per cent). Ordinary trading activities on behalf of clients along with income from trading in structured products were lower. Other ordinary results rose to SFr11.6 million from the sales proceeds of financial investments.

Market performance made a positive contribution of SFr1.9 billion to the Sarasin Group's asset base. A slight weakening of the Swiss franc, especially against the US dollar, added positive currency translation effects of SFr300 million. The Sarasin Group achieved positive net new money growth of SFr500 million, producing total client assets under management of SFr99.1 billion at the end of June.

"The Sarasin Group’s financial performance for the first half of 2012 reflects the macroeconomic environment. In addition, the implementation of our strategy focusing on tax-compliant assets was of particular importance for us in the reporting period,” Joachim Straehle, chief executive of Bank Sarasin & Co, said.

Operating expenses fell by 1 per cent from a year ago, finishing at SFr259.1 million. Personnel expenses were unchanged at SFr194.3 million during the reporting period.

Due to declining revenues, the cost/income ratio increased to 83.3 per cent (1H 2011: 76.4 per cent).

The BIS Tier 1 ratio, defined as core capital as a percentage of risk-weighted assets, comes to 15.5 per cent on 30 June 2012.

In a separate statement today, Sarasin said all necessary regulatory clearances have been obtained for the purchase of Rabobank's majority stake in the bank by Brazilian banking group Safra, announced several months ago.

Tax compliance

“Bank Sarasin is working hard to implement its strategy for avoiding non tax-compliant assets and intends to terminate dealings with any client for whom the tax due diligence process cannot be completed before the end of 2012 or who refuses to handle their assets in accordance with the tax rules applicable in their country of domicile,” the bank said.

“For existing international clients of Bank Sarasin in Switzerland, a comprehensive process is being introduced whereby the bank analyses the tax situation of the assets deposited by the client. The process was first developed and defined for Booking Centre Switzerland in 2011 and has been in place ever since,” it continued.

“Various clearly defined groups of clients are suspended from the tax due diligence process: the process does not affect private clients domiciled in Switzerland, because of the duty of self-declaration for all Swiss taxpayers, and a withholding tax. In addition, Bank Sarasin has decided – in light of various amendments initiated at political level – to exclude from the process any client domiciled in a country with which Switzerland has negotiated a double taxation agreement that provides for a final withholding tax, or which has recently initiated tax negotiations in this area. If the agreements do not come into force, these clients will be subject to the tax due diligence process in accordance with Bank Sarasin's strategy for avoiding non tax-compliant assets,” it added.