Swiss Private Banks Are About To Make A Historic Move To Crackdown On Tax Dodgers
© AFP Fabrice Coffrini
The headquarters of the Swiss private Bank Pictet on August 25, 2014 in Geneva
Geneva (AFP) - The elite of Swiss private banks will Tuesday begin lifting the veil on their books after a radical shift in their business model, amid tougher international regulations and crackdowns on tax dodgers.
Geneva's Bank Pictet opens the way with an unprecedented release of its first-half results, followed on Thursday by crosstown rival Lombard Odier.
"All the figures published will be important, even if these banks are not listed," Andreas Venditti, an analyst at Zurich's Vontobel Bank, told AFP.
The revolution in the secretive world of private banking — which caters for the globe's super-wealthy — began in January when Pictet and Lombard Odier ditched their two-century-old statutes.
Under the former rules, a private bank's handful of wealthy managing partners were personally responsible for the money they managed for their clients.
In other words, if the bank got into trouble, the partners could lose all their assets, not just those they have invested in the operation.
Unlimited responsibility has long been a selling point for wealthy clients who sought the comfort of such a guarantee.
But the increasingly complex nature of global finance has made it hard for private bankers to feel safe with a traditional approach that puts all their assets on the line as they expand their operations.
The tougher regulatory environment seen since the global financial crisis, and scandals such as the Madoff fraud case in the United States which rippled across the world's banking sector, were also a wake-up call.
Switzerland's cherished tradition of banking secrecy has meanwhile been battered as governments -- notably the United States and European Union -- crack down on tax cheats who stash cash abroad.
As a result, a quartet of private banks have shifted from their near-unique status and transformed themselves into businesses almost like any other.
They have recast themselves a "corporate partnership", a hybrid status that will make it easier to compare them with fully-listed Swiss players such as Credit Suisse and UBS.
It is similar to the "limited company" structure in the British Isles, with its well-known "Ltd." label.
The partners now only risk the funds they have invested in the bank, rather than putting all their personal assets on the line.
Not being listed on the stock exchange, private banks do not have to publish as detailed results as mainstream banks.
They are set to reveal their overall performance, plus their half-year profit or loss, the value of assets under management, the ratio of own funds, and their short-term liquidities.
They have no obligation to reveal the salaries of their executives.
For Luc Thevenoz, a law professor at the University of Geneva, the changed business model offers greater protection.
"But the price of that is more transparency," he said.
Old habits appeared to have died hard in some private banks, however.
While Pictet and Lombard Odier revealed when they would publish their figures, fellow statute-changers Mirabaud and LaRoche declined to set a date when contacted by AFP.
Seven lower-profile private banks have meanwhile opted to stick to their traditional operating model.
Read more: http://www.businessinsider.com/afp-...lease-first-ever-results-2014-8#ixzz3BVjI3PlA
- MARIE-NOËLLE BLESSIG, AFP
- AUG. 26, 2014, 1:54 AM
- 4,754
- 10
© AFP Fabrice Coffrini
The headquarters of the Swiss private Bank Pictet on August 25, 2014 in Geneva
Geneva (AFP) - The elite of Swiss private banks will Tuesday begin lifting the veil on their books after a radical shift in their business model, amid tougher international regulations and crackdowns on tax dodgers.
Geneva's Bank Pictet opens the way with an unprecedented release of its first-half results, followed on Thursday by crosstown rival Lombard Odier.
"All the figures published will be important, even if these banks are not listed," Andreas Venditti, an analyst at Zurich's Vontobel Bank, told AFP.
The revolution in the secretive world of private banking — which caters for the globe's super-wealthy — began in January when Pictet and Lombard Odier ditched their two-century-old statutes.
Under the former rules, a private bank's handful of wealthy managing partners were personally responsible for the money they managed for their clients.
In other words, if the bank got into trouble, the partners could lose all their assets, not just those they have invested in the operation.
Unlimited responsibility has long been a selling point for wealthy clients who sought the comfort of such a guarantee.
But the increasingly complex nature of global finance has made it hard for private bankers to feel safe with a traditional approach that puts all their assets on the line as they expand their operations.
The tougher regulatory environment seen since the global financial crisis, and scandals such as the Madoff fraud case in the United States which rippled across the world's banking sector, were also a wake-up call.
Switzerland's cherished tradition of banking secrecy has meanwhile been battered as governments -- notably the United States and European Union -- crack down on tax cheats who stash cash abroad.
As a result, a quartet of private banks have shifted from their near-unique status and transformed themselves into businesses almost like any other.
They have recast themselves a "corporate partnership", a hybrid status that will make it easier to compare them with fully-listed Swiss players such as Credit Suisse and UBS.
It is similar to the "limited company" structure in the British Isles, with its well-known "Ltd." label.
The partners now only risk the funds they have invested in the bank, rather than putting all their personal assets on the line.
Not being listed on the stock exchange, private banks do not have to publish as detailed results as mainstream banks.
They are set to reveal their overall performance, plus their half-year profit or loss, the value of assets under management, the ratio of own funds, and their short-term liquidities.
They have no obligation to reveal the salaries of their executives.
For Luc Thevenoz, a law professor at the University of Geneva, the changed business model offers greater protection.
"But the price of that is more transparency," he said.
Old habits appeared to have died hard in some private banks, however.
While Pictet and Lombard Odier revealed when they would publish their figures, fellow statute-changers Mirabaud and LaRoche declined to set a date when contacted by AFP.
Seven lower-profile private banks have meanwhile opted to stick to their traditional operating model.
Read more: http://www.businessinsider.com/afp-...lease-first-ever-results-2014-8#ixzz3BVjI3PlA
was just watching this yesterday too.
