Swiss Banker Yves Mirabaud: One Size Doesn't Fit All

Yves Mirabaud, head of one of Switzerland's oldest private banks wants the government to take the size of financial institutes into account when it regulates the industry. And he doesn't give credit to the view that the demise of Bank Hottinger was the first of a series.

Mr. Mirabaud, private banking in Switzerland recently suffered a setback: Bank Hottinger collapsed after more than 200 years in existence.

I believe this is a special case. I don't know what really happened. But we definitely shouldn't generalize and talk as you do about a Black Monday for private banking in Switzerland. Bank Hottinger had a very long history but was relatively small.

It is pretty rare that Finma opens bankruptcy proceedings against a bank, so there must have been specific reasons for the collapse that I don't know.

Can you guarantee that your institute won't go in the same direction, after all, assets under management declined in the first half?

I have absolutely no worries in that direction. Far from it: We produced a quality result in the first half of the year in an environment that is extremely complicated. We were concerned when the central bank decided to do away with the peg of the franc, because the majority of our costs occur in Swiss francs while our profits tend to be generated in foreign currencies. So like Swiss exporters, we are to a certain extent «victims» of our strong currency.

«Reassured by our good result»

We were reassured by our good result which came about due to two factors: First, the decision by the management to better control the costs, postpone certain not immediately vital investments and second that the markets were extremely positive at the beginning of the year with a record number of transactions.

Will the good first half be repeated in the second?

This won't repeat itself in the second half of the year, when the results of the banks will be more under pressure as the volumes of transactions dropped since June.

What concerns our assets under management, the drop was a question of arithmetics. The minute that the central bank decided to do away with the peg, we lost 2 to 2.5 billion francs in assets, because we obviously have not just Swiss francs but also foreign currencies in our clients portfolios.

As of today, it is rather remarkable that the banks, and not just us, have a decline in assets that is smaller than expected. Partly because the markets were fine, but also because we see that our financial centre is still attractive and is able to get new customers despite all that happened in the past years.

How have assets developed in the second half of 2015?

The markets are pushing them down, but this has partly been compensated by the weakening of the franc. At Mirabaud we have a net increase of assets, which is reassuring. I believe that the transition from tax secrecy to tax transparency has been accomplished. The drain of assets in the past two years was smaller than expected and we all made a big effort to encourage our clients, whom we thought might have assets that weren't properly taxed, to use all the regularization programs that were available.

How does the future strategy of a Swiss private bank compare with the strategy of the past?

The expertise of our employees, the international outlook of wealth management, the diversity of investments on offer to our clients are traits the Swiss banks have retained.

«Strong in consulting services»

Add to that the stability of the political system and naturally also the strength of the franc. All this should help us offer high quality services and performance to our clients. We also have to develop new services such as support in tax questions or wealth planning. We have always been strong in such consulting services, but we have to widen the brief.

At the half-year presentation you mentioned that you planned to expand the fund management unit.

We have effectively expanded our asset management business line under the guidance of my partner Lionel Aeschlimann. We've hired high-quality bankers, who wanted to be part of the project. Lionel once said: We are a 200-year-old startup. A nice paraphrase of what we are doing.

Do you envisage a geographic expansion?

Our strategy is clear: we have a strong presence in Europe and Switzerland. We have hired new people for our offices in Switzerland. We also strengthened our presence in Europe by opening a bank in Luxembourg, vital to gain access to the European market, which we don't have from Switzerland.