* Pictet and Lombard both switch to corporate partnership
* Partners' liability will be limited
* Banks will face tougher reporting requirements
* Odier says move not a prelude to stake sale or listing
By Martin de Sa'Pinto and Tom Miles
ZURICH/GENEVA, Feb 5 Switzerland's two largest
privately held banks will reorganise their businesses to limit
partners' liability and increase transparency, a month after the
sudden collapse of their oldest rival after intensifying
In separate statements on Tuesday, Geneva-based Pictet and
cross-town rival Lombard Odier both said they would become
corporate partnerships limited by shares from Jan 1, 2014,
giving them the French abbreviation "SCA" after their names.
Both banks ascribed the move to the need to adapt their
structure to help them develop, without mentioning that Swiss
banking faces its biggest crisis in generations or that
longstanding rival Wegelin was forced to shut last month after
pleading guilty to helping wealthy Americans evade taxes.
Swiss banks are facing a regulatory assault from authorities
in the United States and European Union, who suspect them of
helping their citizens salt away billions in untaxed income.
Switzerland has so far failed to negotiate a truce, making
many Swiss bankers wonder how they should operate in future.
By changing to a corporate partnership, the partners at
Pictet and Lombard - eight at each bank - are removed from
Instead, the banks' liabilities will be set against their
equity, which is well in excess of Swiss regulatory requirements
in both cases.
"The transformation into a corporation will ease expansion
into foreign countries where the Swiss partnership structure
often contravened local rules and was difficult to explain to
foreign regulators," said Lombard Odier senior partner Patrick
Odier in a telephone interview.
"We have sometimes had to renounce opening branches because
Odier was quoted by Geneva-based newspaper le Temps as
saying the move was neither a step towards a stock market
listing, nor a chance to sell equity in the bank to a third
party. "This is not about guarding against external problems,"
Pictet Group senior partner Jacques de Saussure said both
banks had been considering a change in group structure for
several years as the result of their gradual expansion abroad
and growth into new businesses like asset management.
De Saussure said the new holding company structure had the
benefits of a Swiss general partnership, leaving the banks as
private companies whose overall control lay with the partners,
but was more easily accepted by foreign regulators.
"The group's structure will also gain in consistency as well
as clarity and transparency, especially for clients, with the
publication of a consolidated annual report and the introduction
of an independent supervisory board as required for an SCA,"
Pictet said in a statement.
Pictet and Lombard Odier, whose competitors include listed
rivals Julius Baer and Bank Sarasin,
currently have several dozen subsidiary companies under the
private partnership. The new structure will put all the group
businesses under a holding company structure.
Founded in 1796, Lombard Odier had assets under management
of more than 160 billion Swiss francs ($176.1 billion) at the
end of 2012, while Pictet, established nine years later, managed
well in excess of 250 billion francs for clients.
($1 = 0.9086 Swiss francs)
(Editing by David Holmes)