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EXCLUSIVE: Reyl Wants To Serve US Clients Without Banking Secrecy

Max Skjönsberg

16 July 2012

Switzerland has the ability to attract US clients without offering them banking secrecy, says the chief executive of Reyl Overseas, a newly formed unit at the Swiss bank designed to attract US clients.

Banking secrecy is a constitutional right in the Alpine state and an intrinsic part of the country’s banking tradition. However, the concept is heavily under attack by revenue-hungry governments around the world, led by the US, going after tax evasion, which has resulted in fines against many Swiss banks and has led to many turning away US clients.

By stark contrast, the Swiss private bank Reyl has come out and said that it wants to tap this market. "For Reyl Overseas, this is not an issue, because when signing the forms to become our clients, they agree to exchange of information with the US authorities,” Roger Groebli told this publication. “In our business model, there is no banking secrecy."

Groebli joined the bank from ABN Amro in March as CEO of the unit, which was set up in 2011. "Out of all the business units at Reyl, this is currently the smallest, and I have started to build it up, since I joined in March,” he says. “We are in the process of hiring new staff and are looking to double in assets this year. We have some projects in the pipeline looking to attract tax-compliant US clients from other banks."

The subsidiary currently has SFr62 million ($63.2 million) in assets under management and plans to grow to SFr100 million by the end of the year. Over the next five years, the plans are even more ambitious, as the parent group aims to double in client assets and reach SFr10 billion. "Growth should at least be at around 10 per cent of the group's assets over that timeframe,” Groebli says. “But you cannot make a five-year plan, because you do not know what is coming, for example the impact of FATCA (the US Foreign Account Tax Compliance Act). It is quite important who will be the next president, as Romney is a former banker he might be a bit more realistic (with regards to FATCA) than Obama. But what you can do is to try to break even, and that should be achievable within two years."

Despite the recent frightening example of Wegelin, which was sold to Raiffeisen at the start of the year after it emerged that it was being investigated by US for allegedly helping clients to dodge tax, Groebli describes the business model of Reyl Overseas as conscious and cautious. "There is always risk involved, that is part of business, but we follow the rules and we have no liabilities, so there should be minimal risks in our conservative business plan,” he says. “Everything is double-checked, four-eyes principle, so it is an extremely conservative approach. You can be sure that no banks can afford to get in trouble as you have seen recent examples of in Switzerland."

When new clients are taken on they have to sign a raft of documents declaring that all their assets have been taxed, as well as indicating their social security numbers. "Some custodian banks go even further and request the client have at least one US share in their portfolio,” Groebli says. “If they have that, then the information provided is automatically sent to the Internal Revenue Service in the US."

Switzerland still seen as reputable

He believes that Swiss banks have a lot to offer US clients even without banking secrecy: "What we practise is wealth management and not so much the brokerage style,” he says. “That is especially appreciated by those who do not want to optimise their wealth but preserve the capital, get steady and safe returns and can access their money. They have to be able to trust their bankers because they don't come here every month to check their balance.

"It is not just about a haven, but it is a normal diversification approach,” Groebli says. “Some US clients are concerned about the US dollar and the eurozone situation. And don't forget that a lot of US experts are working around the world. We have a lot of international and US companies here in Switzerland and their personnel need to bank with someone. The definition of US clients is quite broad.

"They also appreciate the accessibility of Swiss banks to focus on certain products, for example physical gold,” he says. “Even the accessibility towards Latin American and Asia is in many cases much better than in the US. Many clients appreciate Switzerland as a gateway to international markets. Technically US banks have the same access, but generally, bankers in the US don't look outside their market as much as Swiss bankers. The market is extremely US-centric.

"That is the good reputation Switzerland still has, despite that we have been bashed all over the place recently," he says.

Despite the fact that some of the biggest Swiss banks including UBS and Credit Suisse have stopped managing US assets on an offshore basis, Groebli describes competition in this market space as fierce as many firms such as Vontobel and Pictet are still in the race: "It is not just that people are going to queue up to open a bank account with us just because we have said that we are going to tap this market,” he says. “We have a number of competitors and those who serve clients best will gain market share.

"Some companies are just offering discretionary portfolio mandates,” Groebli says.“We are also offering individual advisory accounts, for example for a US executive who gets paid in stocks, he or she cannot invest into a discretionary portfolio but needs practical solutions on how to manage his or her portfolio."