A Swiss-based network has been created to assist banks to switch clients between themselves as part of pressing need to comply with tough new regulations from the US and elsewhere to lift the veil of secrecy over the identities of clients.
Millenium Associates, a wealth industry advisory firm based in Zurich, has initiated the programme, called CATCH. It stands for Client Asset Transfer CH.
It is aimed at advisory firms in the four private banking centres of Switzerland, Liechtenstein, Luxembourg and Monaco. It will also encompass the UK and other offshore centres, enabling what Millenium calls ‘the client-friendly transfer of private banking clients with each centre’.
So far some 120 banks across Europe have been invited to become members.
Ray Soudah, Millenium’s founder and CEO, estimates that as much as $500 billion of client assets will change hands over the next three years as banks and financial advisers redraw their business mix, moving in favour of client segments that best suit their revised advisory models.
A big chunk of these funds will be repatriated back to the clients’ home countries, amid the global tax evasion clampdown, giving difficulties for banks without onshore operations in those countries.
The private banking industry will never see such a large amount of money change hands under regulatory pressures again, Soudah contends, saying, "There’s a pressing need for an orderly transfer of this business."
He estimates that 50 percent of newly declared money in Switzerland will return home as "Switzerland is technically becoming an onshore centre…."
CATCH aims to bring together domestic and foreign banks in those various jurisdictions looking to divest themselves of clients from geographies which no longer make sense to service with other banks more accommodative to this business. Millenium will charge what it calls ‘a small fee’ on each revenue share.
Soudah describes the network as a ‘resegmentation initiative.’ It will take up to three years for banks to remix their client bases to accommodate the new regulatory and business environment and reflows from the offshore sector, he asserts.
The CATCH platform has been launched at a time when several leading private banks are known to be trying to exit Swiss offshore banking, in addition to companies like Lloyds of Britain and Morgan Stanley which have already divested their businesses in Zurich and Geneva. Standard Chartered is in talks to sell its Swiss private banking operations.