UBS client money still flowing to regional banks
Swiss regional banks attracted money from their bigger, troubled rival UBS AG in the third quarter but at a slower pace than previously, the head of the banks’ association told Reuters.
Hanspeter Hess said the influx of client money was largely due to changed client perceptions toward UBS, the big Swiss bank shaken by billions in writedowns during the crisis and a high-profile tax spat in the United States, rather the regional banks’ own performance.
Switzerland’s 24 regional, or cantonal, banks are local institutions partly or wholly owned by regional governments and benefiting from state guarantees on savers’ money.
“We have indications the inflows slowed compared to a year ago,” Hess said in an interview.
“But they are still clearly above the levels of two, three, four years ago,” when growth in client money was around 3 to 5 percent annually, he said.
In the first half of 2009, net new money grew 5.4 percent, or 14 billion Swiss francs, though Hess expected inflows in the third quarter to have been less than half the sum registered in the first six months cash advance today.
Last autumn the financial crisis prompted worried clients to shift money over to cantonal banks, attracted by the perceived safety of the state guarantees.
Swiss clients of UBS withdrew 14.3 billion Swiss francs ($14.1 billion) in the first nine months of 2009, according to UBS.
Inflows into the cantonal banks were stronger in Zurich ZKB.UL, Basel, Berne, Geneva and Lausanne than in more rural areas, Hess said.
In contrast to private client money, funds parked short term by institutional investors were starting to flow out again as companies either needed access to the investments or wanted to spread them across two or three banks.
Hess also welcomed growth in higher-margin investment portfolios: “This development is positive as this is the cantonal banks’ core business and there are attractive opportunities in the investment business.”
(Writing by Jason Rhodes; editing by John Stonestreet)
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