The private bank, Lombard Odier Darier Hentsch, is to lay off 15 per cent of its workforce in what is seen as more evidence of problems facing the sector.This content was published on August 21, 2002 - 16:27
Jacques Rossier, a managing partner at Darier Hentsch, which merged with Lombard Odier, said at the time of the tie-up that no jobs would go this year.
The bank said in a statement that half of the 300 jobs would go by the end of the year, with the remainder being cut by 2004.
The cuts come at a time when private banks are facing low revenues amid market turbulence and calls for tighter regulation of "offshore" banking centres. Many are scaling back or merging in a bid to protect their bottom line.
Lombard Odier and Darier Hentsch joined forces to create a firm with $90 billion under management.
Other Swiss private banks have been forced to layoff staff after rapid expansion strategies in boom times. Last week Geneva-based UBP told its employees that 350 of them would lose their jobs in the next year as a result of its merger with Discount Bank and Trust Company.
"The main issue for the whole Swiss private banking sector is that they have substantially expanded their staff base. Revenues have since fallen and the cost base cannot be adjusted so quickly," said Thomas Kalbermatten, an analyst at Bank Sarasin.
About 240 of Lombard's job cuts will be at the bank's headquarters in Geneva. By 2004, the bank said it would bring the headcount down to 1,700 provided that economic and financial conditions do not worsen further.
"The extent of this reorganisation, which will touch a number of colleagues in our professional, personal and family life, has particularly affected the partners of the bank because it does not reflect the traditional values of our establishment," Lombard said.
More to come
Kalbermatten told swissinfo that the cuts came as no surprise, saying pressure on smaller banks had been growing for in recent years.
"Given the market environment, with tumbling equity markets, lower volumes and much lower activity by investors, it obviously had to happen," Kalbermatten said.
Kalbermatten warned that more cuts were likely, citing threats such as the push to unwind Swiss banking secrecy and the prospect of a German tax amnesty.
"And if the markets continue to behave like now, it's most likely well see more job cuts in Switzerland," he said.
Ironically, private banking may also be facing the negative consequences of big-bank mergers - something that saw the sector enjoy big gains in the past.
"Only one or two years ago, small banks were benefiting from the merger of UBS and SBC, and this seems, for this year at least, to have reversed," Kalbermatten said.
"[Private banks] have to concentrate more on their core business, and improve services, attract new money and increase assets under management. That the only way to improve their business," he said.
by Samantha Tonkin
Lombard is to layoff 300 employees.
The bank has $90 billion under management.
Most jobs cuts are to come at its Geneva headquarters.
This article was automatically imported from our old content management system. If you see any display errors, please let us know: firstname.lastname@example.org