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Elite Swiss private bankers still earning millions
[GENEVA]The top Swiss private bankers overseeing funds for clients living outside the country can still command millions of dollars in annual pay, even as pressures on the industry mount, the head of EFG International AG said.
"A very successful client relationship officer could earn in the millions," John Williamson, chief executive officer of the Zurich-based private bank, said in an interview on Wednesday. "As long as they are profitable, as long as they are compliant, they share in the profitability of their business." Senior Swiss relationship managers typically earn 200,000 Swiss francs (US$211,000) to 320,000 francs a year, according to an industry study by recruitment firm PageGroup last year. Switzerland is the world's largest center for offshore funds, managing about US$2.3 trillion for clients who don't reside there.
Some bankers face an uncertain employment future as their firms struggle to withstand pressure on profits after years of low interest rates, an international crackdown on tax evasion and the sudden appreciation of the country's currency in January. With more than a third of the industry found to be unprofitable by KPMG in a study last year, many wealth managers are evaluating options for cutting costs.
EFG reported full-year profit on Wednesday that beat analysts' estimates and said the best-performing private bankers are excluded from a hiring freeze aimed at controlling costs. EFG oversaw 85.1 billion francs for clients at its banks in Europe, Asia and the Caribbean at the end of December. The average amount managed by one of the about 440 private bankers climbed to 217 million francs at the end of 2014 from 174 million francs a year earlier, the firm said.
One EFG compensation model gives private bankers a base salary of about 200,000 to 250,000 francs a year and a 20 per cent share of profit generated for the firm, provided this exceeds 1 million francs, Williamson said.
"There aren't many client relationship officers who get into the millionaire category, but a very successful one can," he said.
EFG added teams in Geneva and Zurich to focus on wealthy individuals with tens or hundreds of millions of dollars to invest. A Zurich-based team concentrating on Hungarian clients will join in March.
Aside from compensation, EFG is seeking to lure from competitors private bankers who are fed up with changes in management and strategy or affected by decisions to cease dealings with clients in certain countries, said Williamson.
"Due to some regulatory or political problem they can exit overnight entire markets," he said, referring to larger rivals. He didn't identify specific banks.
Even as EFG seeks top performers from rivals, it said it tightened minimum performance criteria for individual bankers last year and has parted company with those who were underperforming.