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UBP in the press 30.11.2016

Geneva bank UBP bets on Trump

Geneva bank UBP bets on Trump

NZZ am Sonntag - Private banker Guy de Picciotto recommends investing in the US and casts a critical eye on Europe

Interview: Sebastian Bräuer, Daniel Hug
Photos: Michele Limina
Translated from German

His father made UBP one of Switzerland’s leading private banks. Now Guy de Picciotto wants to expand into Asia.

Guy de Picciotto has been head of the Geneva-based private bank UBP since 1998. To illustrate what a long span that is, think that in the same year Gerhard Schröder became Germany’s Federal Chancellor. In the banking sector 18 years is something of an eternity. 1998 was also the year when the merger of SBG and SBV created today’s UBS.

This 56-year-old is not a typical banker, and stands out with his strong personality. His bank has succeeded in what other financial institutions are desperate to do: to grow fast enough to reach a critical size. Thanks mainly to its acquisitions, UBP now manages 113.5 billion Swiss francs in assets. Its Zurich branch, headed by Peter Schmid, has also gained a lot of ground, expanding its assets under management sixfold within ten years. However, this development has come at a price. The Madoff scandal hit the bank hard, and the business with untaxed US assets ended painfully too, as the bank ended up having to pay a 188 million dollar fine.

Yet de Picciotto is still keen on doing business with the US. Through the bank’s SEC-registered company, he wants to intensify client acquisition there. He does not share the worries about the election of Donald Trump. “I expect Trump to cut taxes as announced, and to invest in infrastructure, which is what the country urgently needs,” he says. “This will revive the American economy. And what is good for the US is also good for Europe. I'm optimistic”.

Even Trump’s intention of limiting free trade cannot upset de Picciotto, who says that by planning to rein in globalisation the future US president is just responding to the demands of many citizens, also in other countries. De Picciotto further believes that the threat of punitive customs tariffs of 45% is no more than a matter of negotiation. Not everyone is so confident in this hopes of a US boom. On the day of the interview with de Picciotto, which took place at UBP’s Zurich branch, the ECB gave out a warning that political uncertainties in the US could cause turbulence on financial markets.

De Picciotto sees it differently: “I recommend buying American stocks now,” he says, although the US indices have already reached highs. He believes investors should be more cautious with bonds because of rising inflation, but that the dollar will continue to rise. He says Europe’s problems are much greater, not only because of Brexit and the upcoming elections, but also because of the political system. De Picciotto sees a leadership vacuum in Europe. “Who rules in Brussels?” he asks rhetorically. “Who could make a difference?”

In the 1950s, de Picciotto’s father Edgar travelled from Lebanon via Italy to Switzerland. He was the leading figure of the bank until his death last March. He distinguished himself by recognising trends in the financial sector ahead of everyone else. He was one of the first to invest in hedge funds, for instance. When asked if the bank is to be listed on the stock exchange, his son explains that it is to remain family-owned. “For wealth managers, it is incompatible to have to produce quarterly reporting and seek short-term revenue optimisation while also acting in the best interests of customers,” he says. “Besides, wealth managers don’t need much capital to work with.”

His brother and sister sit on the bank’s board of directors. But UBP’s CEO refuses any comparison with Zurich private bank Vontobel. The Vontobel family members have signed a long-term written agreement governing the distribution of their shares. De Picciotto says that family owns a bank; his own family not only owns its bank but also runs it. “Perhaps we will need a formal agreement within the family when the third generation starts working for the company,” says de Picciotto. But he hopes he will not have to face this.

For the current year, de Picciotto is pretty sure UBP is on the right track to bring its profits back up after the fall to a mere CHF 25 million last year, for which he blames the US fine and integration costs after the purchase of the private bank Coutts. In the first half of 2016, earnings were 13% higher than a year earlier. In 2017, de Picciotto wants to have the Coutts integration completed. He also wants to recruit teams in select markets in Eastern Europe, the Middle East and Latin America – and to increase profitability in Asia. “With assets under management of 10 billion we are just about break-even there,” he says. Asia boss Michael Blake has announced he plans to double this amount. When asked about this, de Picciotto says: “He’ll have to set high goals – that’s the culture at UBP”.

"I expect Trump to cut taxes as announced, and to invest in infrastructure, which is what the country urgently needs"

Tax transparency

US banks are poaching clients

“There are noticeable capital drains into the US,” says UBP’s CEO Guy de Picciotto. This shift is often attributed to the fact that the US is taking no part in the automatic exchange of information. “The US is a strong competitor for us.” He asserts that in any case the wealth management industry in Switzerland is in better shape than often represented, saying “net inflows have been positive in recent years.” He adds that while many observers have prophesied the downfall of Swiss private banks, the industry seems to emerge stronger out of every global crisis.

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