The Swiss private banking industry just took a major step towards more disclosure and openness, not because some regulator demanded the move, but because the partners of two leading private banks, Pictet Group and Lombard Odier Group, changed their corporate structure to meet their client’s wealth management demands in an increasingly complex world.
Today, the Geneva-based Pictet Group, reporting for the first time as a limited liability company, announced it had 404 billion Swiss Francs ($440 billion) of assets under management and in custody. Operating income for the first six months of 2014 was CHF 975 million; net profit, CHF 203 million. It’s Core Tier 1 capital ratio is 21.7% and liquidity coverage ratio is 166%.
The 1805-founded private bank, previously run as a partnership bank with the partners personally on the hook through their unlimited liability, now operates in 17 countries and has 3,611 employees globally, with the business itself divided between wealth management, asset management, and asset services. On Thursday, the Lombard Odier Group, also of Geneva, will also be announcing its financial results for the first time and for the same reason.
The benefits for clients of an unlimited liability partnership private bank are that the management is personally on the hook for missteps and misdeeds, and, with their own skin in the game, less inclined to cut corners to reach short term profit goals, only to saddle the company with regulatory fines and lawsuits at some later date. An example of this form of partnership private banking, where service, not in-house products, is the key to profits, is the tiny, conservatively-run but highly-profitable C. Hoare & Co. in London, previously profiled in Penta. The downside of private bank partnerships is that the business often suffers from capital constraints, limiting the bank’s growth. That’s particularly true when the bank needs to service globe-trotting clients in multiple jurisdictions with different regulatory regimes....MORE
Tuesday, August 26, 2014
Private Banking: "Pictet, Lombard Odier Unveil Financial Results"