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Swiss private banking model under scrutiny

Only a third of Swiss private banks have begun modifying their business models in order to accommodate new regulatory requirements and client needs, according to a new study by KPMG and the University of St Gallen.

The report, entitled Defining the Future of Swiss Private Banking, highlighted the pressure on wealth managers in Switzerland, which has to satisfy an increasingly complex catalog of regulatory requirements, but at the same time face pressures from clients demanding greater return on investments and increased transparency. 

Nevertheless, Swiss private banks have managed to prosper from the stability of the Swiss financial system and the Euro crisis.

The KPMG report added that the rising costs of regulatory compliance and an erosion of revenues has put pressure on profit margins, but this isn't necessarily leading to consolidation in the sector.

The report said: "Until certain barriers to M&A activity are overcome, the long awaited consolidation in the sector may prove elusive. Main barriers include: strategic and cultural fit, lack of attractive targets and the level of "undeclared" client assets."

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