Strategy

Bank Leu: Tradition with a Contemporary Face

Paul Adams, Geneva, 8 April 2005

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Switzerland’s oldest bank, Bank Leu, adopted the lion, the heraldic symbol of Zurich, as its logo when it opened its doors for business in 1...

Switzerland’s oldest bank, Bank Leu, adopted the lion, the heraldic symbol of Zurich, as its logo when it opened its doors for business in 1755. The bank’s founders made a good choice—as the lion, king of beasts, conjures up the image of a fearless, strong and independent leader.

Bank Leu believes these qualities have come to characterize the bank over the centuries with its landmark headquarters, the so-called “Leuenhof “(lion’s den) on the Bahnhofstrasse in Zurich. Despite being bought by Credit Suisse in 1990, Bank Leu still operates very much as an autonomous organisation, although this link to a global concern ensures that clients enjoy all the advantages of a small bank, but enhanced by the benefits of an international network.

Despite its size, Bank Leu is a highly sophisticated bank. Research is conducted in-house, which makes it independent of generally available data. It also executes its own transactions, which ensures crucial proximity to the market.

The bank had a good year in terms of profitability in 2004 when net profit swelled by 42 per cent to SFr137 million ($113.7 million). Assets under management grew by two per cent to SFr28.5 billion.

The bank has been actively developing its client base in Latin America, where it has a strong presence with offices in San Paulo and Buenos Aires. It has concentrated in servicing entrepreneurs and business executives, as well as wealthy individuals approaching retirement.

Although the bank celebrates its 250th anniversary this year, Bank Leu believes it offers contemporary products and services that can match the best in the business. One of its most popular products has been its European Style Equities Fund, the strategy for which was initiated back in the bull markets of 2000, but continues to perform well, according to the bank.

The fund follows an active investment strategy focused on European equities divided into “value” and “growth” stocks. All industries may be classified into either of these two sectors - the most important return generating factors. All quantitative investment decisions are computer-based which means that decisions are made on discipline not feelings. The fund offers alternatives both to index trackers, due to wide diversification and to stock picking, due to the selection process that identifies most attractive stocks within a universe of 1200 stocks.

Asked why the European Equity Fund is of particular interest to independent managers of private fortunes, Oliver Federer, market manager for institutional clients at the Zurich-based bank, told WealthBriefing that is has demonstrated:

  • Distinct out performance in rising as well as falling markets;
  • Top performance in peer group comparison for many years;
  • First actively implemented style timing model in Europe;
  • Unique timing of value and growth cycles;
  • Structured and disciplined investment process (no sell side influence);
  • Active management with high tracking error; and
  • Performance fee that proves confidence in investment process.

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Mr Federer is confident that the fund will become even more popular with financial advisors as soon as it passes its fifth anniversary—that all important hurdle analysts like to see met before benchmarking against other products.

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