Cards are being reshuffled in the Swiss banking center after the demise of CS
Published: Monday, Dec 18th 2023, 12:20
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The Swiss banking sector has been on the move since the demise of Credit Suisse. In the domestic business, the cantonal banks in particular have benefited from a strong inflow of savings from CS clients. At the same time, private banks and foreign banks are also vying for customers and qualified staff from the big banks.
The ongoing decline of Credit Suisse, which led to the emergency takeover by UBS in March 2023, caused massive outflows of funds from the second-largest Swiss bank at the time. For the local banking sector, this means that the cards are being reshuffled.
Stability sought
The cantonal banks were the first port of call for CS savers who wanted to keep their deposits safe. In a recently published study, the Lucerne University of Applied Sciences and Arts (HSLU) estimates that more than 80 percent of withdrawn CS customer deposits went to the state institutions. "This illustrates savers' desire for the stability and security of cantonal banks," commented HSLU Professor Andreas Dietrich.
The shift in market share was correspondingly significant: According to the HSLU study, which refers to data from the Swiss National Bank (SNB), the big banks' share of total Swiss customer deposits shrank by 4 percentage points to 28 percent between August 2022 and April 2023. In contrast, the cantonal banks overtook the big banks and now have a market share of almost 32%. In contrast, the other banking groups such as Raiffeisen and the regional banks made only moderate gains.
Wave of staff changes
But the local wealth management institutions have not let the opportunity pass them by either: "The big issue in 2023 was who can poach which client advisors from CS," says Andreas Venditti, banking analyst at Bank Vontobel.
With the recruitment of numerous new advisors and often entire teams, the institutions triggered a veritable wave of personnel changes. Coveted individuals with interesting client dossiers were lured away - often to the annoyance of UBS - with high payments, according to industry circles.
Initially unproductive new additions
However, the new situation has only had a limited impact on the client assets of Swiss private banks so far. Although large institutions such as Julius Baer, Pictet and EFG have reported new money inflows so far this year, they have fallen short of the expectations of many investors. "Assets under management are developing rather slowly," said KPMG banking expert Christian Hintermann in a recent interview with the web portal "Finews".
According to industry observers, this is probably due to the fact that new customer advisors only become "productive" after months: Not only do they often have to comply with notice and standstill periods of several months after changing jobs. As a result, they also have to get to know the systems and offers of their new institution before they can contact customers and persuade them to switch.
Poaching also in 2024
How much the newly hired client advisors will ultimately pay off for the individual private banks remains to be seen. "It will be interesting to see whether the new hires only manifest themselves in high additional costs or also in additional client assets," said KPMG expert Hintermann.
However, banking analysts do expect an increase in cash inflows for institutions such as Julius Baer and EFG over the next two years. Due to the launch of client advisors only in the second half of the year, attempts to poach clients are also likely to increase significantly, comments Venditti: "This will be an important topic for 2024."
Many foreign banks are also sniffing the wind of change on the Swiss market. Institutions such as Deutsche Bank, Commerzbank and BNP Paribas have their eye on corporate clients in particular, who are looking for a new banking relationship after the CS exit. For example, a major US bank such as JPMorgan has also presented itself in the media as an institution for Swiss SMEs.
UBS not idle
However, the remaining major Swiss bank UBS is not remaining inactive either: The management of the merged bank has expressly made it its mission to win back as many customers and customer deposits as possible.
For Vontobel analyst Venditti, this is quite realistic. Although many CS clients have withdrawn their funds, they have not left the bank completely. "Especially if the same client advisors are still there, some of the funds could well flow back."
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