Credit Suisse and Baer looking to cut
costs…
Liechtenstein signs deal
with US…
Morgan Stanley seals China trust
deal…
French banks satisfy regional
demand…
Citi bankers set up shop in the
UK…
STRATEGY
Credit Suisse and Baer looking to cut costs
Credit Suisse is to cut 5,300 staff, or 11 percent of its work
force, mainly in investment banking, as part of a series of
measures to reduce costs by CHF2 billion ($1.66 billion).
The bank, the world’s fourth-largest wealth manager, made the
announcement as part of a fourth quarter performance update which
revealed a net loss of “approximately CHF3 billion” at the end of
November. All of the biggest losses occurred in October, with the
Geneva-based bank moving into “modest profit” in November.
It put the losses down to adverse market conditions and costs
associated with its risk reduction programme, which included
exiting some of its proprietary trading activities.
Other cost-cutting measures included the reduction of
risk-weighted assets from $236 billion as of end-2007 to $193
billion at the end of the third quarter in 2008. These are expected
to decline to $170 billion by year-end. The bank added it had seen
solid performance and inflows in private banking.
In an interview given before his death on 5 December (see
Death of Baer’s Widmer shocks industry), Alex Widmer,
Julius Baer’s CEO, revealed his business was also looking to cut
costs and postpone some of its expansion plans ahead of an
uncertain 2009.
OFFSHORE CENTRES
Liechtenstein signs deal with
US
Liechtenstein has signed a deal with the US to extend
co-operation on tax, putting further pressure on other offshore
centres, including Switzerland, to follow suit.
The agreement strengthens the two countries’ ability to “enforce
their respective tax laws”. It says the parties would exchange
information that is relevant to tax policy, including the
determination, assessment, enforcement and collection of taxes, as
well as information regarding the investigation or prosecution of
people subject to taxes.
Liechtenstein’s Prince Nikolaus, a member of the principality’s
royal family, is reported to have said the deal would lead to a
significant change to bank secrecy laws.
It could mean banks in the country are forced to hand over the
account details of clients suspected of having unpaid tax.
STRATEGY
Citi bankers set up shop in the UK
Two former Citigroup/Smith Barney bankers have set up a niche
private wealth management company focused on US citizens and Green
Card holders living in the UK.
The business, MASECO Financial, has been established by Joshua
Matthews and James Sellon, who have over 15 years of combined
experience working with Americans in London. In their previous
roles, the pair managed around $500 million in assets.
Americans in the UK have specific investment requirements
because of their exposure to both the UK and US tax regimes. MASECO
will offer a range of tax-efficient solutions, and can offer advice
on assets held in the UK, US and offshore.
REGULATION
UK to launch offshore centres probe
UK chancellor Alistair Darling has commissioned an independent
review of regulatory arrangements which he claimed allowed offshore
centres with strong British links to attract banking customers with
lower taxes without contributing to the UK exchequer.
It follows the failure of several banks in Britain and overseas,
including Icelandic institutions operating out of centres like the
Isle of Man and Channel Islands.
“At times of stress, depositors need to know who is going to
compensate them. The British taxpayer cannot be expected to be the
guarantor of last resort,” he said.
None the less, tax experts believe that the probe could well
focus, at least in part, on tax practices in these offshore
centres.
MERGERS AND ACQUISITIONS
Morgan Stanley seals China trust deal
Morgan Stanley has announced a strategic alliance with China’s
Hangzhou Industrial & Commercial Trust, taking a 19.9 percent
stake after receiving approval from the domestic regulator. It is
understood to have paid CNY200 million ($29.1 million) for the
holding.
The US wealth manager is the latest of a number of foreign banks
to take stakes in Chinese trust companies. Royal Bank of Scotland
(RBS), Barclays and National Australia Bank (NAB) have all been
given the green light to buy into trust businesses from the China
Banking Regulatory Commission this year.
Hangzhou Trust is a provider of financial services in the
investment management, corporate finance and trust businesses. Its
strategy is to develop its asset management platform to provide
clients with solutions in a range of areas including private client
wealth management.
STRATEGY
SBI recruits 1,200 wealth managers
State Bank of India (SBI), India’s largest financial services
group, is preparing to launch a wealth management operation aimed a
clients with a minimum deposit of INR500,000 ($10,148).
The bank, 60 percent owned by the state, has recruited around
1,200 financial managers for its wealth arm, with further
recruitment in the pipeline (see
PBI’s sister publication RBI 603 for more details). The
service will expand wealth management services to a wider range of
customers than in most other banks in India, which have higher
wealth thresholds.
SBI’s move into the market is also interesting because it is a
majority state-owned business, while private banking and wealth
services have so far been the domain of India’s commercial banks
and foreign institutions.
SURVEY
French banks satisfy regional demand
The importance of a strong regional network has been highlighted
in a report by Société Générale (SocGen). In the survey, it emerged
private banks and institutions backed by major banking
establishments are the wealth managers of choice for HNWIs living
in the French regions.
‘Strength’, with an average score of 8.8 out of 10; ‘expertise’
(8.3) and ‘discretion’ (8.3) were the main qualities listed as
important in choosing a financial partner.
Other major criteria HNWIs take into consideration are the
company’s reputation, the provision of tailor-made wealth
management services, special treatment (mainly mentioned by the
wealthiest) and access to specialists such as lawyers and tax
consultants.
Service to clients in France’s regions was judged to be at least
as good as those given to residents of the Greater Paris area in a
large number of criteria and better in some.
Frequency of contact and friendliness were the areas where
regional clients found service better than their counterparts in
the capital. The survey also found 4 in 10 clients preferred to
make their own decisions, with half relying on an adviser.
SocGen, which has opened regional centres in Bordeaux, Marseille
and Lyon in 2008, plans to set up in Lille, Strasbourg and Rennes
in 2009. The survey was carried out with market researcher TNS
Sofres.
