With the demise of Credit Suisse, a tectonic shift is underway among Swiss wealth and asset managers. finews.asia takes a look at industry developments.
At the end of last year, Credit Suisse had around 1.3 trillion Swiss francs ($1.4 trillion) of assets under management. With its collapse earlier this year, those funds came into play as its clients were withdrawing hundreds of millions of francs in what became a bank run ultimately leading to its takeover by rival UBS.
Following a record year in 2021 for many wealth managers, last year was a disaster due to geopolitical and market turmoil. Through the first six months of this year, things might seem more normal when looking at the results, but substantial developments are behind the numbers (see graphic below).
Generally, wealth and asset managers spend a great deal of time and money courting new clients which have often been loyal to institutions for generations. The implosion of Credit Suisse and the subsequent unleashing of money and talent onto the market is a rare opportunity for competitors to expand their lucrative base of fee-generating assets under management.
Julius Baer CEO Philipp Rickenbacher touched on this in a July interview saying that attracting former clients of the fallen Swiss lender will take time. There'll be «some redistribution of market share» in the long term, and «perhaps the market has overestimated the speed of the shifts. High net worth individuals take their time making these decisions,» he explained.
That doesn't mean banks aren't trying to get the money into their coffers.
Winning Back Clients
For starters, UBS is trying to win back a great deal of the funds withdrawn from Credit Suisse before its March takeover. There's «good momentum» in the recent quarter around efforts to do so, UBS CEO Sergio Ermotti said recently. Still, «it’s going to take a few quarters to regain a good chunk» of those funds, he cautioned, adding that «getting back everything is going to be almost impossible, but our aim is to recapture as much as possible.»
By the end of June, UBS largely managed to halt the negative trend at Credit Suisse. In the bank's Global Wealth Management (GWM) unit, the combined invested assets of UBS and Credit Suisse came to $3.7 trillion.
Perhaps sensing blood in the water, other firms have been aggressively hiring client relationship managers; many coming from Credit Suisse.
Snapping up Talent
While some wealth management firms seemingly don't want to do anything as gauche as talking about taking advantage of a competitor, two firms, in particular, have been particularly forthrightly aggressive in hiring talent from Credit Suisse. Enter EFG and Julius Baer.
In the first half of the year, EFG hired 75 relationship managers, a third of whom came from Credit Suisse. In a recent interview with finews.com, CEO Giorgio Pradelli said «We'll likely be over 100 new hires by the end of the year. The important thing for us is that quality matters more than quantity.»
And the bank doesn't plan to stop there. «We're targeting 50 to 70 new hires a year into 2025 as part of the strategy. In that sense, we have already exceeded our target this year,» Pradelli said.
Doubling Managed Assets
Julius Baer aims to more than double its assets under management which stood at 441 billion Swiss francs at the end of June, to 1 trillion francs by 2030. Rickenbacher said, «we are in growth mode and such ambitions are not unrealistic.»
Earlier this year, Rickenbacher said Julius Baer is having «constructive discussions» with Credit Suisse staffers looking to jump ship. He said the bank has positions to fill in Latin America, Asia, including Hong Kong, as well as Europe and Switzerland. It recently established a desk in Dubai to conduct business with external asset managers.
The Middle East is Fertile Ground
Part of the hunt for talent is playing out in the Middle East, particularly Dubai, a region where Swiss wealth managers are investing heavily as part of their strategy to increase their AuM.
With the introduction of golden visas and oil wealth, the Middle East is a fertile ground for attracting high-net-worth and ultra-high-net-worth individuals. That makes the region very attractive for Swiss wealth managers who have been setting up offices in Dubai.
Geneva-based Lombard Odier plans on doubling its workforce in the UAE within three years, as finews.com reported. Edmond de Rothschild, the private bank in western Switzerland, wants to tap more deeply into the financial source in the Gulf. UBS strengthened its business in the region and plans to increase the number of ultra-high-net-worth individuals it serves. Zurich-based bank Julius Baer is planning to expand its crypto asset management operations in Dubai,
Safety of the Cantonal Banks
One argument that has been made by those wanting to attract funds away from UBS is the investments it offers often overlap with those of the taken-over Credit Suisse, and that clients should diversify their investments.
That has played into the hands of the state-owned Cantonal banks which are seen as offering a safe haven in the currently uncertain times. Those tracked by finews.asia, collectively increased their assets under management by 46.5 billion francs to the end of June compared to the end of the year. While this can't all be attributed to former Credit Suisse clients moving their assets there, it shows the attractiveness of stability.
«The net inflow of new money is broad-based and is largely unrelated to events surrounding Credit Suisse,» said ZKB CEO Urs Baumann upon release of its first-half results at the end of August. Zuercher Cantonal Bank (ZKB) alone saw AuM increase by 30.4 billion francs from the end of last year, up 7.6 percent.
Wealth managers often talk about thinking and planning in terms of generations for their clients. What's going on in the industry is a once-in-a-generation event that they're seeking to take advantage of.
