Swiss private banks’ assets drop by 11%

Pictet from Geneva topped the list in terms of assets under management. Keystone / Salvatore Di Nolfi

Assets under management in 2022 fell by 361 billion, according to a report by consultancy firm KPMG.

Swiss private banks were unable to repeat their solid performance of late 2021, which was driven by strong inflows of new money and a good investment performance. Last year, inflows dried up and performance was negative, taking total assets under management (AUM) from CHF3,259 billion at the end of 2021 to CHF2,898 billion in December 2022 (-11%), according to a KPMG study published on Tuesday.

The number of private banks established in Switzerland has fallen steadily over the past decade. Compared with 161 establishments in 2010, the number has fallen to 89 by the start of this year. Small private banks with less than CHF10 billion in assets under management have been particularly hard hit, falling from 122 to 56 in the space of 13 years.

+ Many Swiss private banks facing ‘extinction’

The contraction was less marked for medium-sized banks (with assets of between CHF10 billion and CHF100 billion), which fell from 35 to 25 during the period under review. On the other hand, the big players with assets in excess of CHF100 billion – excluding UBS and Credit Suisse – doubled their presence from four to eight banks.

“Radical changes” needed

Costs remain high in small and medium-sized establishments and radical changes are needed to improve the ratio of income to expenditure, warned KPMG.

“Rising interest rates have allowed banks to take a breather, particularly those at the lower end of the profitability scale. But that shouldn’t distract from the fact that this group continues to face enormous challenges,” said Philipp Rickert, Head of Financial Services at KPMG Switzerland. “Efficiency increases and investments in digitalization are still top priorities for improving profitability.”

While the number of consolidations in Switzerland remained low last year, the number of transactions involving private banks and independent asset managers rose sharply. The industry’s major players are expected to continue their international expansion.

Of the 73 institutions surveyed, Pictet from Geneva topped the list in terms of assets under management, followed by Julius Bär from Zurich. In mid-table group are Vontobel, J. Safra Sarasin, Lombard Odier, Edmond de Rothschild, UBP and EFG.