Strategy

Mid-Sized Swiss Private Banks: The Season Fast Approaches

Contributing Editor, 21 February 2005

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Banca del Gottardo and Union Bancaire Privée have both done it. Vontotel, Julius Baer and Bank Sarasin have yet to, although they are about ...

Banca del Gottardo and Union Bancaire Privée have both done it. Vontotel, Julius Baer and Bank Sarasin have yet to, although they are about to.

What? Report their 2004 profits. In the last two weeks, the two heavyweight Swiss wealth managers released their results. Both showed strong buoyancy in their private banking numbers and very strong asset gathering abilities during 2004.

So far this has not been observed in the medium-sized Swiss private banks. Banca del Gottardo reported disappointing results last Friday, with net profits falling 17 per cent to $59.9 million. And assets under management rose by 7 per cent to SFr41.1 billion—nothing to write home about.

Union Bancaire Privée—which has shown real resilience in its results during the last five years—only saw a modest net profit increase of 8.4 per cent in 2004. And an increase in assets under management did not much outpace Gottardo’s—at only 8 per cent to SFr72.4 billion.

However, net new money flows at UBP were a healthy SFr5.1 billion. Gottardo gave no indication of net new money flows.

Can we surmise from these results that the three other mid-size powerhouses of Swiss wealth management will also be releasing less than spectacular results?

“Speculation isn’t good,” said a Swiss banker close to one of the institutions, “but the private banking businesses of some of these firms are a little bit flat right now.”

First up is Bank Sarasin, which announces its full-year results on March 1st. Basel-based Sarasin had a good year in 2003, announcing a profit of SFr70 million, but everything is better than the disastrous loss of SFr316 million the bank made the year before.

Can the bank repeat its success? Well Sarasin has gone through most of its restructuring and has launched a mass affluent initiative, which looks to be yielding results. But do not expect any spectacular numbers; instead look for a moderate profit rise.

Julius Baer is next on the block, reporting its 2004 results on March 9th. Baer’s results will be the most widely anticipated as the bank’s future is probably more uncertain than any of the other mid-sized banks.

Again, do not expect anything dramatic here. Profits might be boosted by the sale of the bank’s North American business to UBS, but the underlying results will probably tell a different story—a bank still struggling against the competition from the likes of UBS and Credit Suisse.

Lastly, Vontobel’s results are announced on March 17th. Here we might just see a little bit more growth than their already mentioned compatriots. Vontobel appears to be on the straight and narrow after a few years of real difficulty. Management changes are embedded and the alliance with Swiss cooperative bank Raiffeisen Group is yielding fruit.

But all these banks sometimes look enviously at Pictet and Lombard Odier Darier Hentsch when it comes to reporting unspectacular results. Their partnership structures mean that one can only speculate what their results are.

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