The three biggest wealth managers in Switzerland – UBS, Credit Suisse and Julius Baer – may have lost as much as SFr18 billion ($17.6 billion) due to an Italian tax amnesty, according to Morgan Stanley analysts.
Clients pulled out between SFr3 billion and SFr7 billion from the wealth management divisions of both UBS and Credit Suisse to take advantage of the programme’s 5 per cent fine, the US bank said in a research note. Julius Baer may have lost between SFr1 billion and SFr4 billion, it continued.
The Italian government, along with other countries such as the US and UK, has been using tax amnesties as a way to encourage wealthy citizens to disclose money secreted in offshore bank accounts. The recent UK amnesty, for example, achieved limited success. However, the Italian amnesty appears to have been more successful than the market had expected, the Morgan Stanley note said.
Stemming client outflows has become a key test for UBS in particular, as Switzerland’s biggest bank has suffered withdrawals in recent months, hit by concerns about its huge credit market losses and a costly tax case in the US.
Net redemptions at UBS’s wealth management and Swiss bank division may rise to SFr20 billion in the fourth quarter from SFr16.7 billion in the third quarter, Morgan Stanley estimates.
Under the Italian amnesty system, Italian clients are not required to move their assets once they have been declared.