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* Foreign inflows boost assets managed in Swiss city
* Bankers say outlook remains difficult for 2013
* Seek institutional funds, high net worth individuals
By Stephanie Nebehay
GENEVA, Oct 17 (Reuters) - New clients fleeing Spain's debt crisis and havoc in the Middle East have buoyed assets managed by banks in Geneva even though the outlook for the Swiss safe haven remains difficult, bankers said on Wednesday.
"Thanks to an inflow of fresh money, the excellent news is that the amount of funds under management has grown," Bernard Droux, president of the Geneva Financial Centre, told an annual news conference.
"We know there have been inflows from the euro zone, Spain particularly, and the Middle East where there are fears and instability, as well as from new markets including South America," he said.
Spanish customers who have lost faith in their banking system have sought shelter from the storm, he said, adding that the funds they were transferring were declared to the taxman.
Spain's government dodged a bullet on Tuesday when Moody's Investors Service affirmed its investment grade rating, assuaging widespread fears that the euro zone country would be cut to a junk rating.
Droux, who is also managing partner of Lombard, Odier & Cie, was presenting the group's industry survey of first half results, which includes replies from 40 banks and 100 independent asset managers, but does not reveal any figures. It also asked bankers to forecast prospects for next year.
"We expect 2013 to be relatively difficult. Some members dare to hope, but for others it will be stable at best. For independent asset managers, one really sees a need to reorganise and proceed with mergers," Droux said. "Times remain tough."
Droux said that costs for legal and fiscal compliance have soared about 10 percent in the last two to three years, squeezing tight profit margins, while more independent asset managers may face job losses or consolidation.
The lakeside city is home to 133 banks employing 20,129 people. Swiss private banks famed for their discretion, including Pictet and Lombard, Odier & Cie, as well as branches of giants Credit Suisse and UBS, and Banque Cantonale de Geneve are among them.
Another 2,578 are employed by 854 independent asset management companies.
Geneva's financial institutions must concentrate on three priority areas, said Edouard Cuendet, board member of the Geneva Financial Centre who also serves as general secretary of the Geneva Private Bankers Association.
"There are three axes for development - institutional fund management, private management for high net worth individuals and trade financing," Cuendet told reporters. " T hese are areas where there is high added value and Geneva can perform."