Switzerland’s private banks are seeking to poach key staff and clients from Credit Suisse as steep job and bonus cuts force bankers into the market following the takeover by UBS.
Julius Baer, Pictet, Lombard Odier, EFG and LGT are among Swiss wealth managers sounding out disgruntled Credit Suisse bankers, people familiar with ongoing conversations have told the Financial Times, offering job stability and attractive sign-on packages to make up for bonuses blocked or wiped out by the government-backed UBS takeover.
Credit Suisse employees saw hundreds of millions of francs worth of deferred bonuses erased by the emergency takeover last week, while the Swiss government has ordered a freeze on future bonus payments. Many are also anticipating swingeing job cuts, as UBS seeks to integrate its biggest rival into its own successful franchise.
“The best people don’t wait,” said one senior executive at a top-five Swiss bank which is negotiating with individuals at Credit Suisse. “This is a highly competitive environment. All UBS has to offer is five years of insecurity.”
A board member at another rival said he knew of an entire Credit Suisse team, of 10-15 people, that was looking for an exit. “They will move in a block. [It’s] in a location where UBS already has a team. The head of location knows he’s not going to be number one, so he has decided he wants to look for other options and his team will follow him . . . Things are going very fast.”
Credit Suisse’s operations in Asia are a particular area of focus, several rival bankers said: the region has been the major driver of profit-growth in Swiss private banking over the past decade, but the spoils have been unequally shared. Many midsize Swiss banks have, until now, been outcompeted by the two big banks.
The share price at Julius Baer, which has a sizeable Asian footprint, rose 13 per cent last week.
While most analysts have been positive on what the takeover of Credit Suisse will mean for UBS, the loss of key employees will have a significant impact on what the banks’ combined wealth management franchise eventually looks like, some have warned.
“In the end this is a relationship business,” said Andreas Venditti, analyst at Vontobel, another large Swiss private bank. He expects senior bankers to take major clients with them when they depart. In some respects, he says, they will be pushing at an open door.
“You have a lot of ultra high net worth individuals [UHNWI] who were clients of both UBS and Credit Suisse, because they value diversification,” he said. “UBS has tried to play down the overlap of clients but I would be very surprised, frankly, if it was that low.”
He also pointed to an existing trend of outflows: rich clients took SFr95.7bn out of Credit Suisse accounts, net, last year.
The head of one Geneva-based private bank said they had seen “significant” inflows from their rival and expected more. “Of course, if you were an UHNWI who had assets shared between CS and UBS, you’re now looking to share your assets elsewhere with the two becoming one.”
He, too, said he was negotiating with Credit Suisse staff: “We are spending a lot of time on the phone.”
“Clients are worried — everyone is worried — about where this is going,” said Nicole Curti, chief executive of Capital Y, an adviser to high net worth individuals and families, and president of the Alliance of Swiss Wealth Managers.
“The advice we have been giving to clients is to diversify — to the private banks like Pictet, Lombard Odier and of course Julius Baer, but also to the Swiss cantonal banks, which have good online payment systems for custody of cash.”
Curti said she also expected a lot of Credit Suisse bankers to join smaller wealth-advisory boutiques, or set up their own, as well as flock to established private banks.
An adviser to UBS said retention was now the “number one” issue for management as it grapples with digesting its rival.
The combined bank will have a balance sheet of close to SFr5trn, with SFr3.3trn of assets managed for the very rich.
“Credit Suisse private bankers are being called left, right and centre,” he said. “The real worry at UBS is about retention over the next six weeks before the deal’s done . . . some of the domestic Swiss banks are going to Credit Suisse private bankers and offering an increase in compensation but also committing to pay bonuses that at least include their deferred compensation, so they will be making them whole on what they are losing at CS.”