PRESS-NEWS.org - Press Release Distribution
PRESS RELEASES DISTRIBUTION

Swiss private banking in clinch with high cost level

2013-10-23
(Press-News.org) Contact information: Urs Birchler
urs.birchler@bf.uzh.ch
41-446-342-952
University of Zurich
Swiss private banking in clinch with high cost level For the international wealth management industry, 2012 was a more benign year than the harsh 2011. Due to favorable stock and bond markets the volumes of managed funds increased, though not returning to pre-crisis levels. In addition, most banks managed to attract new funds. Nevertheless, the biggest wealth managers lost some market share to medium-sized competitors. Post-crisis low turnover and low interest rates still put pressure on returns, while cost levels remained sticky. The cost/income ratio remains critical even though gross margins on managed assets stabilized from 2011 to 2012. This is particularly true for Swiss banks and, after a significant deterioration over the last few years, for Liechtenstein banks.

Swiss banks: business models for tax-compliant and performance-sensitive clients International initiatives against tax evasion and pressure on offshore oriented private banking centers have hit Switzerland hard. Bank data theft, the fear of involuntary disclosure and various tax amnesties have led to the loss of profitable client mandates for banks. The Federal Court ruling to limit commission fees is another challenge to the Swiss wealth management business model. "The traditional offshore model servicing mainly price-insensitive clients is making way for new strategies, this time directed at tax-compliant and performance-sensitive clients," says Prof. Urs Birchler, the lead author of the study.

Despite a challenging international political environment, Swiss financial institutions managed to increase their assets under management from 2011 compared to 2012, due to favorable market conditions, including stabilized USD and EUR exchange rates, on the one hand and successful efforts to attract new money on the other. Five banks dominate the Swiss private banking market with a market share of 72%, among them the international leaders UBS and Credit Suisse with a joint market share of 56%.

Likely consolidation of smaller Swiss banks in the foreseeable future The erosion of gross margins observed since 2006 has come to a halt, with smaller banks performing slightly better than bigger ones. In revenue-per-employee figures and in cost/income ratios, though, the more labor-intensive smaller banks are falling behind their bigger competitors. "For all Swiss wealth managers, the cost levels remain high, but for some smaller banks, costs may be too high in the long run," warns Urs Birchler. "Consolidation seems unavoidable. In the future, additional costs imposed on the banks by increased international regulation may considerably change the face of the industry and in turn threaten the survival of a number of long-established Swiss private banks."

Positive net new money figures over the last three years and slightly improved cost-income ratios in 2012 suggest that the banks are rising to their challenges. "Be that as it may, many banks still have some potential for further cost optimization through careful choice of out- and in-sourcing services," states co-author Christian Bührer. According to the authors, Swiss banks that are already strong in asset management might improve even further if two factors were to change: the abolition of the Swiss stamp duty and gaining full access to the European markets. "Swiss wealth managers are thus challenged on two counts: for one, to revise their business models in the light of tax-compliant and performance-sensitive clients, and second, to cope with the ever present cost pressure," concludes Christian Bührer.

### Literature: International Private Banking Study 2013, Urs Birchler, Christian Bührer, René Hegglin, Lukas Meier, and Florian Reeh, October 23, 2013.

Background The sixth issue of "The International Private Banking Study" investigates the competitiveness of 190 private banking institutions from 11 different countries (Switzerland, Austria, the Benelux countries, France, Germany, Italy, Liechtenstein, UK and the US). Analyzed aspects include profitability, operational efficiency, assets under management and net new money developments.

Contact: Prof. Dr. Urs Birchler
Department of Banking and Finance
University of Zurich
Phone: +41 44 634 29 52
E-mail: urs.birchler@bf.uzh.ch


ELSE PRESS RELEASES FROM THIS DATE:

The molecular clock of the common buzzard

2013-10-23
The molecular clock of the common buzzard Bielefeld biologists reveal the influence of genes on dispersal behavior This news release is available in German. Be it hibernation or the routes of migratory birds: all animal behaviour that is subject to annual ...

Nanopore opens new cellular doorway for drug transport

2013-10-23
Nanopore opens new cellular doorway for drug transport A living cell is built with barriers to keep things out – and researchers are constantly trying to find ways to smuggle molecules in.‬ ‪Professor Giovanni Maglia (Biochemistry, Molecular and Structural ...

New software traces origins of genetic disorders 20 times more accurately

2013-10-23
New software traces origins of genetic disorders 20 times more accurately In a bioinformatics breakthrough, iMinds – STADIUS – KU Leuven researchers have successfully applied advanced artificial intelligence to enable the automated analysis of huge amounts of ...

Insights into how TB tricks the immune system could help combat the disease

2013-10-23
Insights into how TB tricks the immune system could help combat the disease Researchers have identified a potential way to manipulate the immune system to improve its ability to fight off tuberculosis (TB). TB is a major problem for both humans and ...

Communication with similar people stronger than believed

2013-10-23
Communication with similar people stronger than believed People's tendency to communicate with similar people is stronger than earlier believed, which restricts the flow of information and ideas in social networks. These are the findings that an Aalto University ...

People don't put a high value on climate protection

2013-10-23
People don't put a high value on climate protection Without further incentives selfish behavior will continue to dominate This news release is available in German. People are bad at getting a grip on collective risks. Climate change is a good ...

Long-term memory helps chimpanzees in their search for food

2013-10-23
Long-term memory helps chimpanzees in their search for food Searching for bountiful fruit crops in the rain forest, chimpanzees remember past feeding experiences This news release is available in German. Where do you go when the fruits in ...

Study finds natural compound can be used for 3-D printing of medical implants

2013-10-23
Study finds natural compound can be used for 3-D printing of medical implants Researchers from North Carolina State University, the University of North Carolina at Chapel Hill and Laser Zentrum Hannover have discovered that a naturally-occurring compound ...

PD map: Putting together the pieces of the Parkinson's puzzle

2013-10-23
PD map: Putting together the pieces of the Parkinson's puzzle LCSB researchers pool global knowledge in interactive map Parkinson's disease continues to puzzle physicians and biologists alike - even though it is well-established that symptoms like muscle tremors, ...

Super song learners

2013-10-23
Super song learners Researchers uncover a mechanism for improving song learning in juvenile zebra finches This news release is available in German. Most songbirds learn their songs from an adult model, mostly from the father. However, there are relatively ...

LAST 30 PRESS RELEASES:

Attitudes, not income, drive energy savings at home

The playbook for perfect polaritons

‘Disease in a dish’ study of progressive MS finds critical role for unusual type of brain cell

Solar-powered method lights the way to a ‘de-fossilized’ chemical industry

Screen time linked to lower academic achievement among Ontario elementary students

One-year outcomes after traumatic brain injury and early extracranial surgery in the TRACK-TBI Study

Enduring outcomes of COVID-19 work absences on the US labor market

Affirmative action repeal and racial and ethnic diversity in us medical school admissions

Cancer progression illuminated by new multi-omics tool

Screen time and standardized academic achievement tests in elementary school

GLP-1RA order fills and out-of-pocket costs by race, ethnicity, and indication

Study finds HEPA purifiers alone may not be enough to reduce viral exposure in schools

UVA Health developing way to ID people at risk of dangerous lung scarring even before symptoms appear

How can we know when curing cancer causes myocarditis?

Male infertility in Indian men linked to lifestyle choices and hormonal imbalances

An acoustofluidic device for sample preparation and detection of small extracellular vesicles

The advent of nanotechnology has ushered in a transformative era for oncology, offering unprecedented capabilities for targeted drug delivery and controlled release. This paradigm shift enhances thera

A prototype LED as thin as wallpaper — that glows like the sun

Transnational electoral participation of undocumented Mexican immigrants in the US

A new method to build more energy-efficient memory devices for a sustainable data future

Freely levitating rotor spins out ultraprecise sensors for classical and quantum physics

‘Chinese lantern’ structure shifts into more than a dozen shapes for various applications

Towards light-controlled electronic components

Tiny architects, titanic climate impact: scientists call for October 10 to become International Coccolithophore Day

Stress sensitivity makes suicidal thoughts more extreme and persistent among the university population

Lessons from Ascension’s shark troubles could help boost conservation

Fire provides long-lasting benefits to bird populations in Sierra Nevada National Parks

Menstrual cycle affects women’s reaction time but not as much as being active

Housing associations more effective than government in supporting unemployed in deprived areas

Biochar helps composting go greener by cutting greenhouse gas emissions

[Press-News.org] Swiss private banking in clinch with high cost level