In an interview with finews.tv, Martin Schilling predicts that Switzerland will have only half as many private banks as today within the next ten years. Many assets from former Credit Suisse clients would flow from UBS to other banks over the next two years, as the banking expert from PwC Switzerland elaborates in the conversation.
In 2010, there were around 160 private banks in Switzerland; now there are just under 100. «It can be assumed that about five significant transactions take place each year,» says Martin Schilling, a banking expert at PwC Switzerland.
Against this backdrop, he expects that there will be only about 60 private banks in a few years, as he further notes in the interview with finews.tv.
There is no real wave of consolidation, but rather the number of banks has been steadily decreasing over the years, Schilling adds. The reasons are diverse, including stricter regulations, rising IT costs, and the increasing effort required for digitalization. These increased expenses erode profit margins.
However, the PwC banking expert is cautious about setting a minimum size of assets under management as a criterion for a bank's viability.
Combining Tradition and Modernity
«There are plenty of examples of very small financial institutions with less than 5 billion francs in client assets that are highly profitable," Schilling emphasizes. «What matters is the bank's business model and its target clientele.»
In this context, the PwC advisor also does not believe that wealth management will only be conducted through digital channels in the future.
«There will always be a need for client advisors, not least to advise clients on digital wealth management or investments in private equity. The future of banking will be a combination of tradition and modernity,» Schilling summarized on the banking world of tomorrow.
Redistribution of CS Funds in One to Two Years
Schilling acknowledges that growth dynamics in other financial centers like Singapore or Dubai are significantly higher than in Switzerland. However, new money is still being created in Switzerland, for example, through the influx of wealthy entrepreneurs from abroad and the economic performance of our country. Thus, there is no significant outflow of funds abroad; even the Russia sanctions have not led to significant changes.
Where the money of Credit Suisse clients will flow will become apparent only in two to three years, Schilling continues in the interview. The observation period so far has been too short.
«Many [CS] clients are initially switching to UBS and waiting. A redistribution to other banks will occur no earlier than in one to two years,» is the PwC banking expert’s conviction.
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