Barclays Pressing Swiss Private Bankers to Double Client Assets
The new head of Barclays Plc’s Swiss unit is pushing private bankers in Geneva and Zurich to double client assets in four years as international competitors exit the world’s largest hub for offshore wealth.
James Buchanan-Michaelson, who joined from Coutts International in June, aims to increase Swiss assets, including loans, to 28 billion Swiss francs ($29.8 billion) by 2019 to boost the fortunes of a unit that’s barely breaking even.
“The aspiration is to double the size of the Swiss business,” Buchanan-Michaelson, 49, said in an interview at the firm’s offices in Geneva. “It’s a hard stretch for bankers to try and achieve that.”
Lloyds Banking Group Plc, ABN Amro Group NV and Morgan Stanley are among international firms that quit Switzerland’s private-banking market in recent years as tax authorities in the U.S. and Europe led an assault on bank secrecy and the franc’s strength crimped profit margins. Barclays, which provides cross-border wealth-management services to U.K. residents and customers from the Middle East, Russia and Africa, has reiterated a commitment to Switzerland.
Tougher rules, rock-bottom interest rates and rising regulatory costs may push as many as 30 percent of the 130 remaining Swiss private banks to seek mergers or shut their doors in the next few years, KPMG said in a study this month.
Barclays’s Swiss unit earned 5 million francs in 2014 from overseeing 11.8 billion francs, after posting a loss of 42.4 million francs in 2013, according to the unit’s annual report. Client assets dropped 5 percent in 2014 after net outflows of about 746,000 francs. Employees fell to 327 from 365.
Buchanan-Michaelson previously headed Coutts International in Geneva, where he helped scale back the firm before Royal Bank of Scotland Group Plc agreed to sell the business to Union Bancaire Privee in March. A former private banker at JPMorgan Chase & Co., Buchanan-Michaelson said he will ensure Barclays in Switzerland becomes more profitable.
Bankers will have to become more productive by boosting revenue from services such as investment advice and mortgages, because hiring won’t increase at the same pace as clients’ assets grow, Buchanan-Michaelson said.
Two former Coutts colleagues focused on U.K. offshore clients followed Buchanan-Michaelson to Barclays, and it’s “quite possible” that more may follow, he said.
“I would be very surprised if bankers at Coutts weren’t talking to other institutions in general, particularly at this moment in time,” he said.