What was the logic behind this merger?
The rationale relates to changing client expectations. The clientÆs sophistication is increasing and that means we need to give a comprehensive advice while still maintaining the individual client service. The other trend is that open architecture and broad product offerings are increasingly important. Open architecture is something many banks speak of, but very few do it. What is important for us is to have innovative products. Thirdly, from the Swiss perspective, growth is shifting towards emerging markets. That means we need to strengthen our international presence. Then there are economies of scale. We have ever-increasing fixed costs û the legal environment is an issue, IT is an issue, and product development and research are issues. So reaching a critical mass is a must, in terms of assets under management. And finally, the Swiss private banking industry is still highly fragmented and we feel like the consolidation process will continue. We are taking the next step.
So five trends drove this. The four banks all had different markets and products, and we wanted to consolidate that.
Is consolidation in Swiss private banking an ongoing trend that has some way to go?
Yes, the very small players will find it very difficult to develop. They will not be able to expand internationally.
Does this structure somewhat mirror what was done by UBS and Bank Julius Baer?
ItÆs different. UBS sold its private banks to Julius Baer. We are integrating ours and still keeping them within the Credit Suisse Group.
How will Clariden Leu distinguish itself from Credit Suisse from the client perspective?
We will continue to be û even with assets above SwF100 billion û a true private bank. We will only offer private banking and related product services. From the client perspective, we offer an attractive alternative to clients that could be with Credit Suisse, but perhaps prefer to be with a smaller unit. ItÆs complementary; itÆs not to be seen in terms of competition.
What will be the impact on the Asian business of the merger?
The four constituents banks now have direct access to a booking centre in Singapore, which they previously did not have. ThatÆs very important in a European context. All these banks have strong European businesses and with the introduction of the European withholding tax that becomes increasingly important.
So you think a lot of European clients will start to book in Singapore?
ItÆs an offer we can give in Singapore, that has to be seen in the overall global context. There will be, and are, clients who may view Singapore as ideally situated in the largest growth market in the world and want to do more business in Asia. So it is not just because of tax. But having said that, the main focus of our Singapore office is to create business in the Asian region.
What is your outlook for the private banking business in Asia? Are you bullish?
Very much so. It is the region that is growing much faster than any other. In Europe there is very little wealth creation. The onshore Swiss market is not growing. Asia is leading the world in wealth creation.
Are you planning to expand your staff in Asia?
Yes, we are planning that. At this stage we find it a bit of a challenge, because very many competitors are trying to do the same. There is a limited number of really experienced, well trained individuals one can hire, and clearly the compensation levels have started to go up. So we find it a bit more difficult. But we are still able to hire and expand.
How many relationship managers would you like to have in Asia in the next couple of years?
Good growth would be if we can add to the existing 20 relationship managers, about 10-15 each year.
You seem to be mostly bullish. Do you have any concerns?
I am a bit worried about the US dollar exchange rate situation, given the imbalance in trade between the East and the West. This clearly puts a strain on the system.
We are therefore employing more alternative investment strategies, and are shifting assets into Asia on behalf of our clients. I include Japan in that statement. We are very bullish on Japan. We also like luxury goods stocks as a way of playing the build up of wealth in emerging markets. I believe the emerging markets will continue to outperform the mature markets.
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