A time of change in Geneva as Swiss banking re-thinks its business
GENEVA, SWITZERLAND – The news Tuesday that Switzerland’s largest bank UBS will cut up to 2,500 jobs in Switzerland as it retreats from trading to re-focus on wealth management comes just after a survey released in Geneva that shows its financial management firms with mostly stable turnover in the first six months of 2012, with employee numbers shrinking slowly.
Overall, the largest banks have had a harder time in the first six months of 2012 than smaller ones but the larger ones remain more optimistic for the year as a whole. When asked about 2013, the majority of firms said they expect it to be either a difficult or stable year, with few expecting real growth.
Banks with more than 200 employees said they expect to reduce staff numbers in 2013, while most other firms said they expect numbers to remain unchanged.
Managing institutional funds has proved to be a stronger business than private wealth management at many firms. Assets under management have been relatively stable or grown at most banks, while the figure is lower for many independent wealth managers. The change is due primarily to assets acquired or lost, rather than to market or currency changes.
Geneva’s role as a financial centre appears, ironically, to have been strengthened in recent months despite signs of a downturn and hesitation about what the future holds.
The impact of the UBS decision will not be clear for some time, and speculation continues about how hard Swiss banks are being hit by private clients pulling out as a result of new tax agreements with other countries, in particular Germany, Austria and Britain.
But the banking institutions and wealth managers, when questioned, were overwhelmingly negative about what the tax deals will do for their businesses short-term, and only large banks felt less negative about the longer term impact. And yet medium-sized and large banks are optimistic about turnover for 2012, with banks of fewer than 50 employees and private asset managers gloomier about ending the year in the black.
Geneva rejoined a list of the world’s top 10 financial centres (Financial Centre Futures Index) in September 2012, jumping three places. It remains the world’s largest centre for managing institutional fortunes, with 10 percent of transnational private savings managed from Geneva, according to Geneva Financial Center. The city has nearly 140 banking firms (of which 60 are foreign-owned), 3,000 financial intermediaries and 800 independent asset managers, the industry organization notes.
The financial industry has slipped from first place in the local economy, but it still accounts for 19 percent of Geneva’s GDP (gross domestic product).