Swiss private banks are more upbeat than they were a year ago, despite increasing pressure on the sector which threatens to reshuffle business models and increase consolidation.
The Ernst & Young (E&Y) Bank Barometer 2013 found that 74% of respondents were either positive or somewhat positive about their business, up from 61% from last year.
These numbers were still a long way off the 2010 totals when 89% of private banks were positive or somewhat positive.
Tax agreements: private bank’s optimism
Interestingly, the proportion of private banks that anticipate an overall positive impact from current tax agreement developments has increased, from 32% in 2011 to 55% in 2012. Again, this is still a long way behind 2010 totals when 85% were positive.
Small and medium sized private banks in particular increasingly hold the view that developments are positive, while foreign banks tend to have a more pessimistic opinion, E&Y said.
Significant increase in competition
The majority (60%) of the banks surveyed identify private banking as the area in which competition is currently fiercest, which represents a drastic increase compared to 35% in 2011.
But private banks’ do not anticipate significant outflows of client funds due to new final withholding taxes, with 88% expecting no significant outflow or only a small outflow (5-10% assets under management).
Consolidation: shake up for workforce
Pressure in consolidation is also mounting, as an overwhelming majority (92%) anticipate that the banking sector will see consolidation.
This is particularly true for private banks, who believe consolidation will take place in the shorter them.The survey also shows drastic changes when private banks were asked if they anticipated workforce numbers to remain stable.
Only 18% say their number of employees will increase, compared to 42% in 2011, while 70% of private banks are optimistic that the workforce will remain unchanged over the next 6-12months (compared to 55% last year).
Financial crisis benefits
Three quarters of respondents said the financial crisis has "cleansed" their organisation, while 30% said their organisation has actually been strengthened by its fundamental effects.