The shake-up has created opportunities for Pictet & Cie. Group SCA, Geneva’s biggest bank, to hire from outgoing competitors, according to a company official who asked not to be identified in line with policy. Pictet’s headcount in Geneva climbed about 10 percent to 2,204 in the two years through 2015, according to the official.
While HSBC announced 260 jobs cuts last year as it modernizes IT systems, the company has repeatedly said it’s committed to keeping a private bank in Geneva. Barclays Plc and JPMorgan Chase & Co. have also pledged to keep their private banks in the city.
Trade Finance
ING Groep NV, the Amsterdam-based lender that sold its private-banking operations in Geneva to Julius Baer in 2009, is expanding in Geneva to become a major player in trade finance, an area once dominated by BNP Paribas SA. The French bank was hit by a record $8.97 billion fine in 2014 for violating U.S. sanctions against Iran, Cuba and Sudan through transactions often executed from its Geneva office.
Unlike some other Swiss cantons, Geneva has retained many of its tax breaks for affluent foreign nationals and it’s still an attractive place for them to visit, according to Alexandre Toussaint, managing partner at AppleTree Asset Management SA, which advises rich families on their assets. Some wealth managers need to modernize to keep that business, he said.
“Many of the banks are really stuck with the compliance and regulatory issues and they can’t focus on developing new business,” said Christian Hintermann, a partner at accounting and advisory firm KPMG. “The first quarter of 2016 was more difficult than ever before, except perhaps the middle of the financial crisis.”
Swiss banks have paid more than $5.5 billion in penalties to the U.S. Department of Justice in an investigation that has shown how they helped American clients evade taxes. Switzerland is the biggest offshore financial center with $2.3 trillion of assets, according to Boston Consulting Group.
“There is still undeclared business all over Geneva,” said Lorne Baring, chief executive officer of B Capital SA, a U.K.-Swiss multifamily office. “The banks have got to lose that business, or make it compliant. It’s going to get harder to make these businesses more profitable.”