The Geneva private bank UBP has hired 150 wealth managers in the past year, half of them in Switzerland. The CEO, Guy de Picciotto, sees the bank’s best chances for growth abroad. But he has no illusions about any international agreements helping him in this task.
Where does investing pay off the most?
Looking at it from a three-year perspective, I’m convinced of the US economy’s superiority. The US is still the largest and most efficient financial market.
What do you think about Europe?
All the European countries have enormous internal problems. Switzerland should do everything it can to remain an island and, at the same time, maintain bridges to Europe. But we should be under no illusion: we, Swiss banks, can forget unrestricted market access to Europe. The main banks, and ours, have got organised and are partly operating out of Luxembourg, and we have been able to grow our assets under management in Europe.
What effects do wars and tensions have on the banking business?
Tensions generally strengthen Switzerland’s position as a safe haven – except in the eyes of Russian clients.
Are you talking about the sanctions regime?
Implementing sanctions is expensive and complicated for the financial industry. Our experts meet every morning to assess the situation. There’s a cacophony of regulations, some of which contradict each other.
Do you expect Russian assets to be confiscated?
Interest and dividends are already not being credited to the sanctioned Russians. We shouldn’t carelessly agree to confiscations. If assets are confiscated globally in accordance with the same principles, Switzerland can participate. Not otherwise.
Will UBP continue to make numerous acquisitions, like it has in the past?
If there’s an opportunity, we’ll take it.
How much money is available for this?
Plenty. Because if it needs to, the Bank can count on the support of the family holding company.
Describe the typical UBP client.
There isn’t a typical UBP client. We have a wide variety of clients – entrepreneurs, institutions, wealthy heirs. Our clients are very international.
What proportion of your clients are Swiss?
In Wealth Management, UBP manages around CHF 4 billion for clients domiciled in Switzerland. We’re particularly well positioned for clients relocating to Switzerland.
How has your clients’ behaviour changed in the past few years?
The period of low interest rates before and during the Covid pandemic led a lot of investors to make riskier investments in order to achieve returns. Since interest rates have risen, clients are increasingly investing in fixed income, as well as in fiduciary deposits and money market funds. This means that clients have been less active in the markets, resulting in lower transaction volumes, and so our income from brokerage fees and commissions has suffered in the past year. On the other hand, our net interest income has risen. Overall, our revenues have remained stable.
Does UBP have the right products to accommodate this change?
Absolutely! Our broad client base is looking for a wide range of products. Thanks to our Asset Management arm, we have core flagship funds and an extended product range that we manage ourselves. These cover the most important investment needs and asset classes. We have also developed specific expertise like high-yield and emerging-market bonds and corporate debt.
What’s in vogue with investors today?
Hedge funds are now enjoying a resurgence in popularity. There's also a demand for thematic investment funds, such as for artificial intelligence. Younger investors are also interested in private market investments and sustainability.
Every bank offers that, don’t they?
We have been active in private market investments for years and are in a position to offer our clients direct access to select opportunities.
And what attracts investors to ESG investments (sustainable investments with regard to environmental, social and governance principles)?
Protecting the environment is usually the main driver.
But generally the demand for sustainable investments is overestimated.
We are capturing our private client preferences on these issues. So far, only 15% of them want to include ESG and sustainability in their portfolio management. When it comes to investing, most clients are primarily looking for returns and consider ESG a constraint. Our job is to enable clients to make informed decisions on ESG investments’ risks and opportunities.
Do your client advisers have any choice about what they recommend? Isn’t the Bank’s recommendation list ‘the Bible’?
Client advisers are more than just a number at UBP. They don’t just have to sell what the Bank dictates. We have the flexibility to avoid standardisation.
Standardisation is good for cost efficiency – isn’t that an issue at UBP?
That issue is more pressing for the big banks than it is for us. The biggest cost pressure comes from administration and compliance. You won’t find many economies of scale in compliance.
Could artificial intelligence change that?
Artificial intelligence will definitely help. But it won’t reduce regulatory pressure.
I don’t believe that robots can or should take over investing either.
What differentiates UBP from other Geneva-based private banks?
Everyone’s chasing the same clients. But we have a different strategy and history. First UBP was created 50 years ago and is owned and run by one single family. Also, we have made several acquisitions and incorporated different cultures, which probably also differentiates us from other private banks in Geneva.
What role does the Zurich branch play for UBP as a location?
CHF 23 billion of our assets under management come from our Zurich branch’s clients, and we employ 250 people there, meaning ours is probably the largest branch of a Geneva-based bank in Zurich. It covers the Swiss, German and Eastern European markets, plus the Mediterranean and the Middle East.
What does Credit Suisse’s acquisition by UBS mean for UBP?
It’s made it easier for us to fill job vacancies. However, the major beneficiaries of the changes have been the cantonal banks, which saw large inflows of assets due to their government guarantee.
Should Switzerland demand a larger capital buffer from UBS to make the Swiss financial centre safer?
The current capital requirements for UBS are fine. There’s no point in increasing them. The Credit Suisse crisis wasn’t caused by lack of capital.
What do you think was the reason behind Credit Suisse’s downfall?
Credit Suisse’s downfall was not due to a lack of identification of the problems. There were a lot of warning signs but they didn’t systematically trigger an action plan or appropriate reporting.
You’re over 60 now. What plans have you made for your succession?
The succession process started several years back. There are already two representatives of the next generation working at the Bank: my nephew in Geneva and my son, who started in London in the summer. I’m not going to resign any time soon, but I’m sure that I’ll be able to successfully pass on the baton.