Lombard Odier Partner Says EU to Bar Swiss Offshore Banks
Geneva’s private banks may have to wait years before they can prospect for business in the European Union from Switzerland and service clients across borders, according to a managing partner at the city’s oldest bank.
The EU won’t allow the banks to market wealth-management services into the 28-member bloc, especially after the Swiss voted on Feb. 9 to cap immigration, Anne-Marie de Weck, one of eight managing partners at Cie. Lombard, Odier SCA, said at a British-Swiss Chamber of Commerce conference late yesterday.
“The only way that we can export our services cross border for Switzerland in Europe is to havemarket access and we won’t have it in time,” she said. “It will take years to obtain market access because we’ll have to renegotiate the export of services. I don’t think that within Switzerland people are ready to go in this direction and I don’t think that in Europe they are ready to make huge exceptions for Switzerland, especially with the type of votes we have had.”
Almost 12 years after opening borders to EU expatriates, Swiss citizens recoiled, backing an initiative to impose limits on immigration that contravenes an EU treaty agreement. At the same time, Swiss bankers have been lobbying against separate EU proposals to ban them from marketing their services directly to residents of the union from Switzerland.
While some Swiss financial firms have opened banks or asset-management companies in other European countries to target local markets, rich people still want to put some of their wealth in offshore jurisdictions to spread risk and invest in other currencies, de Weck said.
The EU proposals come at a time when Switzerland is facing competition from Miami, London,Luxembourg, Hong Kong and Singapore to be the offshore booking center of choice for affluent individuals and families. Switzerland is losing its tradition of banking secrecy as countries prepare to implement new standards on automatic exchange of information between tax authorities as early as 2015.
For private banks in Geneva, the issue of cross-border marketing of services in Europe is the most important regulatory matter facing the industry, said de Weck, describing European clients as Geneva’s “domestic base” of customers. These are “clients we have had for over 200 years so obviously we are very keen to serve them,” she said.
While Swiss bankers can’t cross the border into places such as neighboring France to meet with clients or try to develop new business there, competitors in London or Luxembourg would be able to visit EU customers under the proposed rules, according to de Weck.
Swiss banks may need to relocate thousands of jobs to new branches or subsidiaries in EU countries to be able to service wealthy people in those countries, the Swiss Bankers Association has said.
The bank has no plans to acquire businesses in EU countries to compensate for the loss of private-client services from Geneva, de Weck said, speaking on the sidelines of the conference. The company doesn’t exclude making purchases in the future, she said.