The Geneva private bank's profit held steady despite massive investing, including a hiring spree. It plans to enter the U.S. market, where it is still on the hook for helping tax offenders.

The Swiss wealth manager's net profit for the first half edged just one percent lower to 262 million Swiss francs ($290 million) on the year, it said in a statement on Tuesday. Spending outstripped revenue, which climbed four percent amid copious hiring and poaching, as detailed by finews.com. It also benefited from a lower tax rate and relatively modest provisions.

Pictet, controlled by seven partners including ex-Julius Baer boss Boris Collardi, said assets under management as well as custody shrank nearly three percent to 559 billion francs compared to end-2019. Pictet booked fresh net funds «in the low double-digit billion range,» senior partner Renaud de Planta said, without specifying.

Star Pulling Power?

It didn't detail where the funds are coming from, making it difficult to ascertain what the so-called Collardi effect was: the star banker's pulling power at Pictet is enormous, but has also proven tricky for the secretive wealth manager's other six partners, as finews.com wrote two months ago.

Like Liechtenstein's LGT, or hometown rival Lombard Odier, Pictet cashed in on a trading boom during March and April that roiled markets: trading income surged 71 percent. Smaller house Mirabaud saw its profit slide 22 percent in the same period.

U.S. Tax Probe

Pictet said it plans to open new offices in Shanghai and in New York for its asset management activities, which now make for a greater share of its asset pile. The U.S. move in particular is noteworthy because Pictet is one of just two Swiss banks – Zurich-based Rahn + Bodmer is the other – still on the hook in a years-long criminal case for helping American tax dodgers and cheats.

The hunt for American millions hidden in Swiss offshore accounts began with UBS' $780 million fine in 2009. Though it eventually engulfed hundreds of Swiss wealth managers, a core group including Pictet, Julius Baer, and Credit Suisse were pursued criminally (Credit Suisse topped the league tables with $2.5 billion in fines six years ago).

Spending Bill

A seven percent climb in spending, which surpassed 1 billion francs in the first six months, is partly due to the hiring efforts of Collardi, whom the bank backed publicly two months ago. The bank is also spending several hundred million on a new campus in Geneva's Carouge neighborhood, and renovating a pricey Zurich historical landmark.

«Pictet remains geared for expansion and continues to invest in new staff and technology,» it said in a statement. Collardi, who oversees Pictet's wealth management arm together with Marc Pictet following a recent partner rotation, is also in charge of the bank's information technology and operations. Its profit last year dropped nearly ten percent after it added 374 new staff to its ranks.