Odier Says Franc Move Is ‘Wake-Up Call’ for Banks to Cut Costs
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(Bloomberg) — Switzerland’s banks will be forced to accelerate cost cuts because of a stronger franc with negative rates seen hurting margins, said Patrick Odier, president of lobby group Swiss Bankers Association.
“It’s a wake-up call,” Odier, 59, a senior partner at Cie. Lombard, Odier SCA, Geneva’s oldest and second-largest bank, said in an interview at the World Economic Forum in Davos, Switzerland. Banks will have to “rethink the speed with which innovation is introduced.”
The Swiss National Bank Jan. 15 roiled global markets by abandoning its three-year-old franc cap and further lowering rates on sight deposits, the cash-like holdings commercial banks keep with the central bank. While the “overshooting” by financial markets won’t last, negative interest rates will “certainly have an effect on profit,” he said.
“It will be to the detriment of smaller, less-diversified companies,” said Odier. “Consolidation will continue.”
–With assistance from Giles Broom in Geneva.
To contact the reporter on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net Simone Meier, Keith Jenkins
