Swiss banks face the prospect of losing 15%, or Sfr135bn francs ($139bn) of their assets as a result of Western Europeans taking their money onshore, said Herbert Hensle, global head of the Strategy & Transformation team of Cap Gemini SA, in a Bloomberg report.
One of the options is to develop white-money strategies, says Hensle. Julius Baer, Sarasin and other Swiss banks are investing in onshore branch networks to retain European clients repatriating money. Sarasin is implementing a strategy to ensure all clients are tax-compliant by the end of 2012.
The Financial Market Supervisory Authority (FINMA) is going to require all money managers to submit to formal regulation - some say harsher than even EU rules - forcing them all to come onshore by mid-2013.
However, this is a process that is already under way. Reyl says, with 2008 "fresh in their memory", clients are already turning to regulated Ucits products. Alessandro Mauceri, board chairman of Axiom Fund and chief executive of Palaedino Asset Management, says only endowments and foundations will prefer offshore, tax-neutral portfolios.
Louis Zanolin, founder of Alix Capital, says the contraction of the offshore model does not equate to the death of the Swiss funds industry, but to its transfer with much the same strategies to an increasingly transparent environment.
Another is to develop business in the emerging markets. Alternatives fund group Gottex Fund Management in May bought Hong Kong-based Penjing Asset Management to build its presence in the region, thus joining a growing list of Swiss managers making Asia a key business objective.
Compliance and regulatory costs, plus competition from local banks, will cut banks' profit margins. Julius Baer, Credit Suisse, UBS and Sarasin have all reported declines in their profits from assets under management. Smaller local banks and branches of international banks are now likely targets for merger and acquisition.
Nicolas Pictet, a managing partner at Pictet & Cie, expects consolidation will result in a loss of 15-30% losses of jobs in Swiss wealth management sector. Julius Baer is in talks with Bank of America Corp about buying its non-US Merrill Lynch businesses. The Association of Foreign Banks in Switzerland reported that the number of overseas banks in Switzerland fell to 145 from 154 last year.