* Vote may send wrong signal to Muslim investors-analysts
* Sophisticated Muslim investors won’t care much-analysts
ZURICH, Nov 30 (Reuters) - A Swiss vote to ban new minarets could irk some Muslim investors at a time when Swiss private banks are hoping to replace dwindling growth in European and U.S. assets with fresh funds from emerging markets.
Switzerland has traditionally attracted wealth from the Middle East due to its political stability and proximity to the region. French-speaking Geneva has been the main Swiss hub for Arab clients, bankers say, although no there are no official figures available due to Swiss bank secrecy law.
Top Swiss bankers and politicians sought to reassure the Muslim community on Monday by saying that the ban on the constructions of new minarets in the country was not a vote against the right to profess the Muslim faith.[ID:nGEE5AS05E]
“We regret the outcome of the vote because it goes completely against the traditional Swiss values of openness and tolerance and it could send the wrong signal to the Muslim world,” said James Nason, a spokesman for the Swiss Bankers Association.
He said Muslim clients were an increasingly important client segment for Swiss banks, many of which have been developing Islamic financial products.
Middle Eastern clients are a growth area for private banks as their investment choices are generally not driven by tax issues as is often the case with European and U.S. customers.
Attacks by the United States and European countries against Switzerland’s bank secrecy has made it all the more important that Swiss private banks diversify their client base, with many rushing to open business operations in the Gulf region.
“The banks will say this is not a vote against the Muslim community, but this could be a hard sell,” said Steve Bernard, a director at financial lobby Geneve Place Financiere. “The onus will be on the banks to explain this vote to customers who raise concerns.”
UBS UBSN.VXUBS.N, Switzerland's biggest bank by assets, said recently that 109 billion Swiss francs ($109 billion) out of a total of 846 billion francs at its international wealth management division came from emerging markets, which includes the Middle East and the Gulf region.
It also said it aimed to grow its existing top position in Saudi Arabia, the United Arab Emirates, Kuwait and Egypt.
Credit Suisse CSGN.VX, Switzerland's other main bank, has said it is targeting 15 to 20 billion francs of new assets from the Middle East and India by 2012.
Although the Swiss vote is expected to ruffle some feathers in the Muslim community, private bankers said the ultra rich were less concerned by religious issues when investing.
“Huge investors are really professionals and they are able to tell the difference between what is the direct democracy in the sense of a minaret and what is really religious freedom,” said Hans-Ulrich Meister, head of Credit Suisse Switzerland.
“I don’t think this will have a huge impact. But Switzerland has to give a political answer,” he added.
Nason of the Swiss Bankers’ Association said that the vast majority of clients choose their bank on quality and competence.
“We are convinced there will be a minimum negative impact following the vote,” he said.
Although Swiss and other international private banks are increasingly focusing on Islamic banking, many investors continue to choose products that do not carry an Islamic tag.
“In times of crisis we tend to look for the bogeyman, usually a foreigner or someone of a different religion, and Islam ticks both boxes,” said Toby Birch, founder of Guernsey-based Birch Assets and an expert on Islamic finance.
“But it might not make a huge difference. A lot of the Islam money invested in Switzerland is invested conventionally.”
($1=1.002 Swiss Franc)
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