GENEVA Swiss private bank Reyl & Cie is aiming to double its assets under management to over 10 billion Swiss francs ($10.2 billion)within five years, partly by targeting U.S. clients turned away by rivals, its chief executive said.
Many Swiss financial firms have shed U.S. clients after tensions between U.S. and Switzerland rose following an investigation into 11 Swiss banks including Credit Suisse and Julius Baer.
The banks are accused of aiding wealthy Americans to hide funds through hidden Swiss offshore accounts, an ongoing probe that the two governments are negotiating to settle.
Several private banks including Reyl and Vontobel are targeting U.S. clients through entities registered with the U.S. regulator, a shift from past attempts which focused mainly on providing U.S. clients with offshore banking services.
"Most players in Switzerland are throwing the baby out with the bathwater with regards to U.S. clients," Francois Reyl said in an interview late last week.
"It is a very interesting niche. The whole U.S. tax scandal has created a distance between U.S. clients and Swiss banking institutions which we believe can be bridged, so we're being a bit contrarian."
The family-run bank started Reyl Overseas Ltd - an arm designed for tax compliant U.S. citizens - last year with the acquisition of Solitaire Wealth Management.
Reyl said he hoped to double its size from $50 million at the time of acquisition to $100 million by the end of the year and had hired Roger Groebli as chief executive for the affiliate in March.
Still, the bank's bread and butter remains emerging market millionaires from the Middle East Gulf, Russia and India.
Reyl plans to open a Middle East branch within 18 months, mirroring efforts by other private banks to expand outside Switzerland as they brace for deals the country has struck with several European countries to tax offshore accounts. The tax pacts are widely expected to lead to fewer foreign clients bringing funds to the country.
The Geneva-based group which has 5.25 billion Swiss francs ($5.4 billion) under management is also seeking to expand in London, even after talks to buy two London-based asset managers ended, he added.
"We find London attractive for two reasons - to expand our wealth management business to emerging market, non-domiciled clients ... The second reason is availability of talent in corporate advisory," he said.
The 300-plus unlisted private banks in Switzerland are known for their secrecy and are not required to report their profitability to the public if they choose not to do so.
YACHTS, JETS AND SECRETS
Reyl's push for more clients and assets comes against the backdrop of regulatory and tax changes for private banks, which pushes the price of doing business sharply higher.
Experts say private banks will need at least 10 billion Swiss francs in client assets to be able to afford the glut of lawyers, tax experts, accountants and compliance staff required.
Switzerland, the world's biggest offshore center with around $2.1 trillion assets under management, is set to announce plans to clean up its reputation by demanding that banks force clients to declare their money is taxed.
Reyl, son of the firm's co-founder Dominique Reyl, said that he was "very optimistic" that the Alpine country could remain competitive even without tax advantages because of its political stability, industry know-how and reputation for discretion.
"The culture of secrecy is strong - take the tax element out and it still remains," he said, adding that smaller boutique private banks would also likely stay competitive because of superior service.
Reyl offers its clients 'lifestyle management' services which he said could include anything from designing the interior of a jet to hiring staff for a private yacht.
Financial turmoil means clients still have little appetite for increasing exposure to riskier assets like equities and commodities, Reyl said.
"We are defensively positioned and continue to focus on capital preservation rather than capital growth for the near future," he said. ($1 = 0.9799 Swiss francs)
(Reporting by Emma Farge; Editing by Katharina Bart)