A Bigger UBS Makes Life Difficult for Private Banks: The earning power of many Swiss private banks remains modest, according to an annual study. Hopes of wresting wealthy clients away from UBS, which is busy integrating… swissprivatebanks comparison
Over the past decade, the number of Swiss private banks has shrunk significantly, with mainly smaller institutions with a few billion francs in client assets disappearing.
Secondly, the capacity for investing in new technologies is significantly lower at the small banks than at the large ones, as the study shows, leading KPMG analysts to the conclusion this particular banking segment will continue to die.The situation is hardly better for the 19 medium-sized banks with assets under management of between ten and 100 billion francs. This group, which includes numerous branches of foreign banks, did see earnings rise significantly last year.
Despite the lowest gross margins, by comparison, the so-called Big 8, from Pictet to EFG, achieved a CI ratio almost 15 percent better than average. That freed up the institutions to focus less on cost management and more on finding profitable growth.This seems to have worked quite well so far as the Big 8 are concerned, which have grown massively over the past decade, and continue to play in the top leagues of European banks, according to the authors.
However, the last word has probably not yet been spoken. Wealthy clients tend to delay following their client advisors' advice when they change managers.The pressure on Swiss private banks to expand could even increase because of the combined UBS, as the bank aims to become a new yardstick among wealthy bank clients.
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