UBS's forced takeover of Credit Suisse has clearly unsettled independent asset managers. Still, some see opportunity despite the imminent threat of a new banking colossus.
Most independent asset managers spent the last two weeks of March on the phone. Some clients had given Credit Suisse custody of their investments. Others actually had the bank's shares in their portfolio. After that, owners and partners started worrying about concentration risk in the Swiss banking sector.
And then, last but not least, came the spontaneous calls from Credit Suisse employees looking for a Plan B.
Similar Risks
A number of those asked by finews.com paint a picture of hectic activity in the days after Credit Suisse's rescue. After the excitement died down, there was a great deal of uncertainty among independent asset managers, not least given they face the exact same risks as everyone else in the finance hub from the mega-merger.
«Swiss external asset managers were generally unsettled by UBS's takeover of Credit Suisse. Before this, the two banks were already very large», indicates Nicole Curti, chairperson of the Alliance of Swiss Wealth Managers (ASV-ASWM) and a partner at Geneva wealth manager Capital Y. She told finews.com that the step creates a much larger entity and that it could weigh on the finance hub and bring a great deal of regulation with it.
Nearing Retirement
«We have to see what the impact will be on smaller institutes, particularly when it comes to supervision», Curti said. Still, many independent managers have been entrepreneurs from the outset, and they see opportunities in the current uncertainty. Moreover, the takeover could prompt movement in a moribund local wealth market, which has experienced little growth in recent years.
For many, the deal could help solve an existential problem in the sector. The impending question of succession. According to Vivien Jain, who heads the Swiss Aquila Gruppe, half of the independent asset managers out there will reach retirement age in the next ten years. Even the smallest of them face the question of succession. It is also likely one of the main reasons why more than 600 independent asset managers declined to apply for a license from the Swiss Financial Market Supervisory Authority (Finma) at the end of 2022.
Reaching for Headhunters
Private Bankers at Credit Suisse and UBS who do not want to undergo four very long years of integration and who intend to instead become independent potentially represent a welcome rejuvenation of the entire sector. «We are seeing many Credit Suisse client advisors getting in touch with independent asset managers», ASV-ASWM chair Curti indicates. That is not just good for employee numbers and client rosters. «If Credit Suisse employees start doing things by their own initiative, then the entire sector will grow.»
Zurich lawyer Nicolas Ramelet calls the current situation a blessing in disguise. «Those that were working in wealth management and have built up a network of clients over years can now take things in their own hands instead of lining up at the nearest headhunter», he recently wrote in a piece for finews first (German only).
Smaller institutes also become increasingly attractive in markets dominated by supersized giants.
Questionable Monopoly
«A monopoly always damages the entire market - it doesn't matter what sector», said Felix Brem. The co-founders and vice-chairman of Reuss Private, a large wealth manager, believe that the forced marriage between UBS and Credit Suisse will redistribute custody assets in the market.
«The private banks that have elevated client requirements and certain selected Swiss digital and online banks that are very cost-effective while having a professional desk to manage independent asset managers will be the beneficiaries», says the former UBS banker. Those institutes that are too small and that don't have such a desk have false hope right now and are probably making too much of the current situation. «They will not be able to survive from an organizational or regulatory perspective in the long-term.»
Tailored Services
With that, they could be losing a good business opportunity, particularly if the aspirations many have in the sector bear fruit, as the ASV-ASWM chair indicates. «We are convinced that the independent asset management model is the right one for the future, particularly when facing up against a megabank. The clients of such institutes will soon recognize the value of a personal relationship and having a single point of contact they can get in touch with», says the financial expert. Beyond that, independent asset managers can better diversify investment risks through independent asset managers and custody banks.
«I am convinced«, says Curti, «you can't be too big in the wealth management business as it remains a tailored, individualized service».
