Hollywood's «Wall Street» made a deep impression on the young Grégoire Bordier. The blockbuster was one of the reasons why he launched his professional career as an investment banker in New York. Eventually, the citizen of Geneva became a private banker, like his ancestors. How does he feel about being one of the last of his kind?

You have been born into a family of private bankers. Was it an obvious choice to follow in the footsteps of your father?

Yes, from very early on actually, when I was about ten years old. But, other than my father, I first made a career on Wall Street in New York at Donaldson Lufkin & Jenrette (DLJ), a company that was later taken over by Credit Suisse.

I was an investment banker. It was a dream come true, not least because I had always been fascinated by the film «Wall Street». When, as a young person, you set your mind on doing something specific, you won't get it out of the system easily.

What did you become so fascinated about?

I was interested in the economy in general. Then came the markets and finally wealth management. The world of finance is always on the move. It is shaped by big events, much like we experience today, and the events force you to constantly think about how the world will look tomorrow to position yourself accordingly. No day is like another. All the more important is strategy. And that is no different at Bordier.

Small private banks are a thing of the past.

Not at all. It rather depends on how you position yourself. Let me explain: there are three segments in wealth management: first, the business with wealthy individuals, then the institutional business with pension funds and other large clients, and finally asset management, i.e. the development and distribution of financial products.

«With an unlimited liability partnership, we vouch with our private wealth for the liabilities of the bank»

Most firms are present in all three segments. Bordier is only active in the first of the three, namely the business with private clients. Hence we are very focused and, as private bankers, with an unlimited liability partnership, we vouch with our private wealth for the liabilities of the bank.

And that is exactly the point. Private banks such as Pictet, Lombard Odier and Mirabaud have evolved into joint-stock companies, which lowers the risk taken by partners.

You're right. But that way, some of the congruous interests of bankers and clients are gone. At our bank, the client knows that I have invested in the same way as he has.

I will, in other words, act more prudently and more conservatively than bankers who have a lesser congruence of interest. Your approach to risk changes once you stop being liable with all you own.

Please explain?

Over time, you take higher risks – for instance in granting lombard loans. They are a good indicator. As a partner with unlimited liability you always will think twice about how much credit you will give to whom.

Did Bordier never consider converting its business into a joint-stock company?

Of course, we have looked into it. But to follow a trend just because others are doing it is no option. We have opted clearly for the model of the unlimited liability partnership, the classic private bank – because it makes sense for us, even if we maybe generate a little less growth.

«There is no critical size»

But, at least we differentiate ourselves from the majority of our competitors. This structure suits us. Time will tell what the next generation will decide to do.

Don't you risk falling below the critical size?

There is no critical size. The size of a bank is always a reflection of the chosen strategy. A company that only does business with Swiss clients from a certain region can be very small and successfully manage a couple of billion francs in client assets.

And Bordier?

As I said, we are only active in private banking, but twenty years ago we decided to also pursue an international strategy. At the end of 2019, we managed 13.7 billion francs in client assets. That makes us, with our 250 employees, one of the 20 largest private banks in Switzerland.

«Yes, Singapore is far away and full of Chinese… these are simple stereotypes»

Apart from that, for many years we have had an outstanding core capital ratio (Common Equity Tier 1 Capital, CET 1) of 29.5 percent – one of the most important key figures measuring the financial power of a bank. And our cost-income ratio is 69.66 percent.

Bordier has a presence in Singapore – a particularly tough market, where several private banks have foundered...

Yes, Singapore is far away and full of Chinese… these are simple stereotypes. Singapore has a huge number of wealthy people; they either live in the city or are banking there. It is a financial market with huge growth opportunities…

…and huge costs.

They depend on your ambitions. Private banks that go to Singapore with a target to acquire 15 billion francs or more in client assets need an entirely different structure than we do at Bordier. We aim for about two billion francs and currently have 1.3 billion francs.

We are well on track, we are making money and we profit from the fact that the expertise of Swiss private bankers is much sought after. Admittedly, it is all a bet, but not a particularly complex one.

Why?

Even earlier, we had an offshore bank on the Turks and Caicos Islands in the Caribbean. Given that this business was about to lose some of its attraction we decided to shift some clients to Singapore. It gave us a basis upon which we could build the business in Singapore more easily.

«There's a huge demand for (Swiss) banks of our size»

We are not under pressure to grow at all cost. We are developing in small steps and we are profitable. And we could withdraw from this market at any one moment.

What makes you so optimistic?

There's a huge demand for (Swiss) banks of our size. We bring the expertise that regional firms in private banking don't have. We could also easily merge with such a firm. But we are profitable in Singapore.

How about your business in Switzerland?

If our clientele were solely Swiss, it would surely be more difficult. The Swiss make up about a third of our clientele. There is still a certain room for maneuver in respect to products for the pension provision. All in all, we would be growing in line with GDP, if it weren't for the fact that Switzerland still is a leading offshore center.

We, therefore, have a lot of foreign clients, with whom we generate a substantially higher rate of growth. For the past three years, it showed in the strong increase in net new money.

With the recent crisis, this will change.

Of course. You can't have tailwinds at all times.

Did you never consider expanding in the German-speaking region of Switzerland?

Our catchment area ends more or less in Bern. We simply lack contacts and relations to gain new clients in Zurich for example. Why should anybody from Zurich wish to open an account at Bordier? Nobody there has been waiting for us. There are plenty of other, long-established banks.

«Geneva-based private banks, in general, have a problem growing in the German-speaking region of Switzerland»

Lausanne and Fribourg yes, but St. Gallen is out of the question. What would we want to do there? Geneva-based private banks, in general, have a problem growing in the German-speaking region of Switzerland. The border is somewhere in the region of Bern.

And abroad?

Currently, we are not opening any new branches. We have what we want. We are serving Europe through several offices, South America from Montevideo and Asia through our unit in Singapore. Any further expansion would stretch our resources, which can't be our goal.

You could also expand via acquisition.

We are always open to an acquisition, but only of a smaller one, of course, one that would be easy to integrate. I'm thinking of teams, such as independent wealth managers or family offices. It also is a question of personalities and of how the culture fits ours.

Private banks tend to have older clients. How do you convince younger people to take their assets to a bank that is 176 years old?

In the end, it all hinges on the effort of each and every relationship manager. Other than at some rivals, our relationship managers still enjoy a lot of freedom. They are the persons of contact for our clients.

«Me too, I have a Revolut credit card»

A majority of our clients has other bank accounts as well, typically with a larger bank – while ours is their special banking relationship.

If we remain with the younger people for a moment. How digital is your bank?

«Bordier FinLab» is the digital tool that we offer to our clientele, for instance, to generate new investment ideas. We are closely following the developments. Our chief operating officer, who used to be our head of IT, is in charge of this.

We don't want to be «uberized» like the taxi industry. We have already anticipated and integrated many developments. The next big thing could be cryptocurrencies.

How do you approach those?

We don't see much demand for cryptocurrencies yet. We don't think that clients are asking for them in great numbers. Maybe some. The reason for this is that such assets are very volatile and not liquid enough to trade. But this may change from one day to the next, as for instance in the case of stablecoins, which have an underlying value.

The development of neobanks such as Revolut is also interesting. Me too, I have a Revolut credit card. And the Blockchain will also radically change our industry. These are all developments that we need to keep an eye on.

Grégoire Bordier, 53, is a representative of the fifth generation of the Bordier family, which gave its name to Geneva-based private bank Bordier & Cie, founded in 1844. He is a managing partner with unlimited personal liability. Before joining the firm in 1997, he worked as an investment banker in mergers and acquisitions (M&A) at Credit Suisse First Boston (CSFB) in New York and London. He started his professional career on Wall Street at Donaldson, Lufkin & Jenrette (DLJ), a long-established U.S. company that was acquired by Credit Suisse in 2000. Bordier studied economics at the University of Geneva, majoring in finance, and completed an MBA at the Amos Tuck School of Business Administration in the U.S. He is also the chairman of the Swiss Private Bankers Association and the vice-chairman of the Association of Swiss Private Banks.