ZURICH (Reuters) - Private banks in Zurich and Geneva are set to pounce on uncertainty among wealthy investors keeping their money in Britain if it votes next week to leave the European Union.
Billionaires and millionaires may turn to Switzerland for stability if there is a vote for a Brexit at a June 23 referendum and an ensuing wave of economic instability, according to senior private bankers at the two largest Swiss wealth mangers.
“Whenever there is uncertainty you have a benefit of a save-haven effect,” UBS (UBSG.S) Wealth Management President Juerg Zeltner said at the Zurich leg of the Reuters Global Wealth Management Summit.
“A little bit of that will of course happen,” said Zeltner, who is responsible for the Swiss bank’s wealth management business outside of the Americas, when asked if Swiss private banks could benefit from a Brexit.
Speaking on Monday, Zeltner said the market had not yet fully priced in the risk of a Brexit and that such a result would trigger a bout of volatility.
“If you see major corrections, clients try to protect their assets first,” Zeltner said. “A lot of clients sit on 30-plus percent cash. So what they are going to do is just move that into what they will consider a safe haven.”
An international tax dodging crackdown led by the United States has chipped away at long-cherished banking secrecy rules in neutral Switzerland, which is not an EU member.
However, it remains the global capital for foreign wealth with $2.3 trillion in offshore assets, according to Boston Consulting Group.
Discretion, political and economic stability, as well as an array of multi-lingual lawyers and bankers are key reasons why the wealthy still keep cash with Swiss banks.
“Whenever there is uncertainty, the Swiss franc and Switzerland are viewed as a safe haven,” said Iqbal Khan, the head of Credit Suisse’s (CSGN.S) international wealth management division, which covers private banking outside of Switzerland and Asia Pacific.
The Swiss franc hit a two-month high against the pound GBPCHF= on Tuesday amid concerns over a Brexit.
A vote to leave the EU would trigger at least two years of talks between Britain and Brussels to negotiate a departure.
Credit Suisse’s Khan said it was unclear whether Swiss private banks could profit once there is greater clarity over what deal Britain would reach with the EU.
“I think it is a very difficult assessment to make,” Khan said, “and it will depend on how it plays out.”
Editing by Ruth Pitchford; Follow Reuters Summits on Twitter @Reuters_Summits