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| Who Needs a Swiss Bank? |
Tumultuous Times
05/03/2004
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The Swiss banks “are coming through a very difficult time,” says Catherine
Tillotson, a partner at Scorpio Partnership, a wealth management consultancy in
London. “The Swiss private banks began expanding in the late 1990s,” she
explains, “and they took on quite a bit of costs” just as the securities markets
turned down. They were going after some of the new wealth being created, she
notes, adding, “They saw that the appeal of Switzerland for tax purposes was
probably going to come to an end; the game was the onshore market.” That
business requires top-tier banking and investment skills; those banks that made
their way just keeping their clients’ money away from the tax collector were
destined to fail.
 Managing a wide range of investments and providing
sophisticated reports to clients can get expensive, and rising costs helped
ignite a merger boom. In 2002, Lombard Odier and Darier Hentsch, two of the
oldest private banks in Geneva, decided to merge, citing the costs of upgrading
their IT platforms as a primary reason for amalgamation. In addition, last year
Union Bancaire Privée bought Discount Bank & Trust, and Deutsche Bank bought
Rued, Blass & Cie., a Zurich private bank.
While the overall
number of banks in Switzerland grew throughout the post-World War II era,
hitting 625 in 1990, the number has since fallen to 413 in 1995 and 369 in 2001,
even as major foreign banks from Europe and the United States were setting up
shop in Switzerland. Millenium Associates, an advisor to private banks,
estimates that the number of private banks will decrease by a third over the
next five years.
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