Europe’s havens lose their cachet
Milan, Frankfurt and London step up the private banking ladder.
“Zurich, where carved-stone lions still guard the swan-filled harbour and Zwingli still stands in bronze, Bible and sword in-hand, beside Gross-Munster, is a city of big banks.” So reads TR Fehrenbach’s seminal 1966 volume, “The Gnomes of Zurich”. But is Switzerland, along with other secret havens, finally fading on the European wealth management map? “London is by far our fastest growing business,” says Leon Blitz, flamboyant head of Investec Private Bank. Investec is concentrating on business booked into London and the Channel Islands. He chastises his Swiss-based competitors for offering leather-bound chequebooks and staff to “walk the dog”, rather than structured products and investment solutions. Citigroup has based its head of European private banking, Christopher Preston, in Geneva. But even he admits that Swiss influence is on the wane. French police have been stopping and searching cars on the mountainous Swiss border for many years, in a half-hearted bid to sequestrate ill-gotten gains. The British government has meanwhile been scolding its semi-autonomous naughty children in Jersey and Guernsey. The islands have finally relinquished some of their secret quasi-tax haven status after concerted international pressure. Slightly louder and fiercer noises are coming from Italy, where the government is demanding the repatriation of funds deposited in the vaults of Zurich, Geneva and Lugano, little more than a yodel away from wealthy Lombardia. Treasury Minister Guilio Tremonti has fired a series of salvos against Swiss banking secrecy – an interesting move given the expert use which his boss, prime minister Silvio Berlusconi, has put offshore centres to in the recent past. But would it be naďve to assume a purely moral standpoint to the Italian crusade against the squirrelling away of assets? Italy has always been in the vanguard of designing new products to attract investors. Now the latest – discretionary portfolio services known as gestioni patrimoniali in fondi (GPFs) – are also due for a boost. These combine asset allocation in mutual funds with a lucrative asset-based advisory fee, similar to US wrap accounts. They are likely to be the fastest growing products driven by the retail funds engine of Milan this year. And where Milan gains, London and Frankfurt will be careful not to fall behind. The German business capital features strongly in the long-term private banking plans of Credit Suisse, Citibank and Schroders. But there is a note of caution from both Citibank and SEI. Both see Germany as a key market, but stress that products need serious service backup to achieve any real penetration. -YB
