How Swiss Wealth Management Performed During Pandemic?

How Swiss Wealth Management Performed During Pandemic?

01 October 2020

                How Swiss private banking sector was doing during the pandemic of COVID-19? Some wealth managers reported great results for 1st half of the year, as coronavirus boost demand for banking services.

Excellent Results

                Taking into the amount wealth management, some banks have reported excellent trading results for the first six months of 2020, including Julius Baer, Zuercher Kantonalbank (ZKB),  or Lombard Odier and UBS' flagship wealth arm. In these entities there was observed a spike in demand for structured products. A bit worse situation was observed in  Bank Vontobel and Credit Suisse's main wealth unit, that both reported decrease of revenue for H1 2020.

Does Wealth Management Matters?

                However, according to experts in crisis times, revenue and profitability of wealth management is not as meaningful as performance on client portfolios. All wealth managers recorded a fall of assets as market was very volatile in the first half of the year. The question was how to get higher revenue in times of lower assets of client and increase activity of clients. Data collected by on assets under management and inflows to private banks, shows how client portfolios were doing in times of coronavirus, that triggered boom for banking services.

Ranking of Client’s Portfolio

                The online publication checked assets of Swiss banks such as: UBS' private bank, Credit Suisse's equivalent unit as well as its domestic bank, Julius Baer, Vontobel, EFG International, ZKB, LGT, Lombard Odier, Union Bancaire Privée (UBP), Mirabaud. Ranking of performance of clients portfolio was won by UBS’s global wealth unit with drop of just 1.7 percent, and 2.909.000 million CHF or USD (as per similar exchange rate of these). Second in was ZKB with decrease of 2.7 percent, and 333.300 million Swiss francs. LGT was third, as it recorded drop of 4.7 percent. Much worse was doing Credits Suisse international private bank with decrease of 8.4 percent, as well as domestic unit of CS with 7.5 percent drop. When comparing these data against benchmarks set by Swiss Markets Index which had fallen 5.4 percent, and MSCI World Index, that shed 6.1 percent, six Swiss banks did better than these: Lombard Odier, Pictet, UBP, LGT, ZKB, and UBS, whereas Vontobel, EFG, Julius Baer, Mirabaud, and Credit Suisse's performance of portfolio was worse. What can come as surprise is the huge difference in performance of portfolios of two biggest Swiss wealth managers, UBS and Credit Suisse.

What Influenced the Performance?

                The difference can’t be solely a result of worse skills of portfolio managers at Credit Suisse. What could have influenced it though, could be withdrawals of clients, and different evaluation method. Some wealth managers included institutional clients, others not; some provided incomplete data on private assets, as these are not required to be publicly disclosed.