Starting at his father's hair salon and ending in finance, Gianpiero Galasso looks back on a quarter century at Credit Suisse. In an interview with finews.com, he discusses his switch to Vontobel as things started to feel just plain wrong.
Gianpiero Galasso, your father was a male hairdresser and that fact prompted you to get into banking. Am I right?
You can say that – and you almost certainly want to hear the story.
Sure!
It goes something like this. My father had a great business idea. He opened a hairdresser's very near Zurich's Paradeplatz under the assumption that bankers would want to be able to cut their hair conveniently close to their offices. He was right about that given that top shots including Rainer E. Gut and other CEOs and chairmen started to show up.
He had a good nose for business!
Well, it gets better. Leaders at that level don't want to be seen getting their hair cut or shaved. So he set up cabins to keep everything on the sly and the clients highly appreciated that.
What does that have to do with your career?
At the time, I was going to secondary school in Enge, after which I started studying at the University of Zurich. But I also played football with the Grasshoppers and found that I didn't have time for homework in the evenings.
«To be honest, it was hard to leave Credit Suisse»
Given that, my father said that I had to finish my homework in the morning in one of his cabins. Among others, I met and got to know Rainer E. Gut personally.
Rainer E. Gut in 2004 (Image: Keystone)
When I finished my business studies, he called me up, congratulated me, and asked whether I wanted to join Credit Suisse's doctorate program and write a thesis on private banking. I couldn't refuse, and I ended up spending 25 years at Credit Suisse.
But then in 2019 – you left. Did you see something coming?
(laughs) Many people have asked me that this year after it became clear that Credit Suisse would be disappearing as part of the bank's integration into UBS.
What did you tell them?
Of course, I had never expected that. But my instinct was already telling me in 2019 that something no longer felt right. To be honest, it was hard to leave Credit Suisse. It is also not good for Swiss finance.
Why is that?
To me, Credit Suisse was always a training ground for young people. For a long time, the internal culture promoted that heavily. I was able to work for the bank in Japan, in Ticino, I worked for Banca di Gestione Patrimoniale, a new and independent private bank at that time, exclusively for Italian and Ticino private clients within CS. All this no longer exists, and that hurts.
From your point of view, what is the main reason for Credit Suisse's collapse?
I don't have the answer to that. The fact is there was a liquidity run at the end when clients started to withdraw their money after losing trust in the bank.
«We don't have all that»
With that, many didn't appreciate how fast money can move in a mobile, digitalized world. Communication in the age of social media, a new phenomenon in that specific respect, was also overlooked.
You have been responsible for the Middle East since 2020, although you are only active there with Geneva-based client advisors. Many banks are currently going to Dubai, Abu Dhabi, and even, more recently, Saudi Arabia. When will Vontobel open a branch in the region?
Not so quickly. There are no plans for that right now. But we want to engage more client advisors for the region. We currently have about 10 specialists active there who are based in Geneva. But we are considering whether to hire people for that market in Zurich.
«We are an interesting choice»
We see potential in the client segment between 1 and 50 million francs, where the demand is for classical investment advisory and wealth management services. Those clients want to diversify internationally and we are in a position to manage about 75 percent of their offshore assets from Geneva. Vontobel's focus on stability, safety, and simplicity makes it an ideal bank partner in Switzerland.
Why is a market worth being active in when you are not present?
Families from the Middle East are very networked internationally today. The children often study abroad and stay there for work. Many young clients in the Middle East have a high technical affinity, and we are an interesting choice given our broad online offering, our digital platform, and our structured products.
There is clear demand. At the same time, we are also conscious that we can't compete with the major banks but that we will always be a niche offering - albeit one with above-average investment expertise.
Has Vontobel profited from Credit Suisse's collapse?
Vontobel has a business model that doesn't cover many areas that Credit Suisse did. The commercial and retail banking businesses, lending, and other services for high net-worth clients and families. Besides advisory and wealth management services, they also had access to sophisticated investment banking services and structured lending solutions. We don't have all that.
We are an investment house. When it comes to wealth management, we aren't active in all the countries and markets Credit Suisse was. That is why we are very selective when it comes to recruiting new client advisors. Basically, we are choosing from a selection of selections.
Vontobel head Zeno Staub bragged about hiring more than 50 client advisors from competitors just this past autumn. How many were in your area?
About ten. But in contrast to other banks, we didn't poach entire teams in the markets I lead. We have a strong filter and we were hiring people from Credit Suisse and other institutions before the 19th of March 2023 (editor's note: the date UBS's acquisition of Credit Suisse was first announced).
Isn't there a great deal of risk when it comes to hiring large numbers of employees at the same time?
Of course. Every single one is an investment and you have to look at it from the point of view of a business case. We have numerous filters and they are very strict. All new employees have to fit into our strategy, market focus, and culture.
Do the hired advisors manage to shift assets to their new employer?
It has become hard but not impossible. But you don't get growth from just bringing over clients, but from the new contacts and networks that new hires bring in.
«We don't simply hire 100 people and then make sure that the 20 best stay»
If the networks fit into Vontobel's business model, competent advisors can attract new business relatively easily. It is more about that.
Consultants believe that client advisors can bring maybe 20, at most 30 percent of their client assets with them. Is that right?
We try to get a higher percentage given our strict selection of new hires. It also depends on individual markets. Like I said, we look very closely at who joins us.
We don't simply hire 100 people and then make sure that the 20 best stay. We take the opposite approach. We hire 20 and make sure they are successful with us and stay for the long term.
How long do new hires have to prove themselves?
As a rule, about three years. That is also standard in our industry. But it is not like that we wait for three years and look to see what they have achieved. We coach new hires constantly.
It is an investment that needs to be watched very closely. To a certain extent, we also have to adjust it along the way. Another interesting fact is that people stay with us for 15 years on average. You don't see the fluctuations in and out that you do at other institutions.
How has your business developed this year?
I can only talk about it until the end of September given that we are currently in the middle of a quiet period. All in all, developments in my areas (Suisse Romande, Ticino, Italy, and the Middle East) were very pleasing.
Even in Ticino, where everyone thinks the financial center faces collapse?
Vontobel has been in Ticino since 2015 when it took over Finter Bank 2015. It then expanded that foothold by integrating Notenstein La Roche, a private bank. We have branches in Lugano and Locarno and we have been able to expand our position with the local clientele, including Swiss-German and German ones. That has helped us curb our dependency on the Italian market that many banks in Ticino traditionally had.
«You can't onboard new clients on Italian territory»
Many good reasons still speak for Ticino. It has always been a stable region with a high quality of life. On top of that, you have all the advantages that Switzerland provides. Low inflation, a strong franc, infrastructure, political stability, and a reliable legal framework. Then there is the regional expertise in private banking and related fields such as legal, fiduciaries, family offices, and trustees.
How about Italian clients?
They are fundamentally risk averse and they mostly invest in domestic government bonds, property – or their own companies. But they also need to diversify and they are always on the search for stability and safety. That is why they often come to Switzerland of their own volition to get globally diversified investment advice and wealth management services.
Added to that is an issue that has cropped up in the meantime – succession planning and the possible sale of family-held companies. Swiss companies have enormous expertise in that regard, and that includes accountants and tax advisors. It is not a question of market access for investment services in Italy but the provision of additional services for Italian clients to receive on an independent basis.
We employ about 30 people there and Ticino is and will remain a niche market - albeit a very important one for us.
Vontobel has also been present in Milan with a wealth management business. How does that all fit together?
Swiss financial institutions are not allowed to access the Italian market without a physical presence. That means that you can't onboard new clients on Italian territory. They can only provide a kind of reverse solicitation from Switzerland. Doing that is often too expensive for traditional private banks while having branches outside of Switzerland doesn't always fit their business model.
Italy is one of Vontobel's strategic markets. Our name has been around for a long time because of our institutional asset management services and our market leadership in structured products. Given that, it was a logical step to enter the market with a wealth management business.
«We should be profitable in one to two years»
That is why Vontobel opened a so-called Società d'intermediazione mobiliare (SIM) in Milan three years ago. It was a way of providing access to the Italian market. It is a legal entity that doesn't offer traditional banking services such as account management, payments, credit cards, or a bookkeeping platform. Instead, it offers investment expertise, which matches our market position as an investment house and meets the diversification needs of clients.
Vontobel has a good proposition with its globally diversified product palette. The fact that the family still owns a majority of Vontobel shares is something else that should be underestimated. Italians are very family orientated and family-owned companies play an important role in the country's economy. A financial institution that a family stands behind is something they are familiar with and, as a consequence, they also trust it.
How large is this SIM in the meantime?
We opened during the pandemic, which wasn't easy. The authorities showed us a great deal of goodwill at the time given that other financial institutions were cutting or stopping their activities then.
We started with 8 employees but now we have almost 30. We have grown strongly in recent years and have been able to onboard a significant number of clients and assets. We should be profitable in one to two years. But we will still be a very small fish in the Italian market, which is something that forces us to grow continuously. Across the entire bank, the growth corridor we strive for lies between 4 and 6 percent. In Italy, we want to grow faster than that.
How is the Suisse Romande different than Ticino?
The two have much in common. But we have to strengthen our brand in the French-speaking region. We entered the market by taking over Notenstein La Roche, which had a branch. We manage the entire region, from Fribourg to Neuchatel, from there. In the Canton of Vaud we employ 16 people and in Geneva a further 65.
We have been in Geneva for a long time. But the competition is tougher there, particularly vis a vis the traditional local private banks. It takes a great deal of convincing to get a wealthy Genevan family to switch to Vontobel. On top of that, we offer asset management and services for independent wealth managers and US clients resident abroad.
«We are considering whether to hire people for that market in Zurich»
Everything considered, we are doing well in that market and have now assets under management in the low double-digit billions. The business has grown strongly in recent years in all areas. Geneva has become our second-largest location after Zurich in Switzerland.
Have you been able to profit from Credit Suisse's collapse in Ticino and the Suisse-Romande?
Not to any great extent. As I mentioned before, we are not in the commercial and retail banking businesses and are also not active in certain markets and countries that Credit Suisse managed out of Geneva. When it came down to it, it was mostly foreign banks and cantonal banks that jumped into the gap. That does not mean we were not in a position to – selectively – hire one or two employees from Credit Suisse.
There are also Credit Suisse clients who came to us, particularly those whose needs could be covered by our business model.
Gianpiero Galasso joined Vontobel in 2019 after spending 25 years working in different functions at Credit Suisse. He currently heads the wealth management client unit and is responsible for the Ticino, French-speaking Switzerland, Italy, and the Middle East regions. He studied economics at the University of Zurich, writing a graduate dissertation on retention marketing in Swiss private banking. He subsequently studied for and graduated with a Dual Executive MBA from the University of Geneva and Pittsburgh-based Carnegie Mellon University.
