Asia’s wealthy turn to Switzerland to park assets

[ZURICH] Swiss private banks are expanding their Asia-focused teams onshore in Switzerland, after a sharp rise in referrals and inquiries from the region in the past two years.

Bankers said Asian family offices and ultra-wealthy individuals were increasingly shifting their money to Switzerland, seeking direct relationships and a haven for assets, including physical gold in vaults.

These clients wanted their investments to be legally booked and held in Switzerland, even if they live and work elsewhere, the bankers said.

Switzerland has held its ground as the world’s pre-eminent haven despite years of predictions that the erosion of bank secrecy and international pressure on offshore finance would diminish its status.

The country remained the top hub for offshore wealth in 2024, with US$2.74 trillion in assets under management, said the Boston Consulting Group (BCG).

Rival centres including Hong Kong, Singapore and Dubai have been growing faster in recent years. Hong Kong had US$2.65 trillion in assets under management last year, said BCG, and Singapore had US$1.92 trillion.

But the two Asian centres have become vital hunting grounds for Swiss private banks, serving as fast-growing sources of new clients, and many of those assets ultimately flow back to Switzerland.

The number of deposits by residents of Hong Kong and Singapore has shot up in recent years, said the Bank for International Settlements and the Swiss National Bank.

The majority of clients continued to book in Asia, but the percentage interested in Switzerland was increasing, said Omar Shokur, chief executive for Asia private clients at Lombard Odier, the private bank.

“In the past, very few clients were requesting additional booking in Switzerland. Now more and more are asking if they can book in Switzerland. This is the new dimension starting,” he said.

The shift marks a break from a decade in which proximity and convenience had made Hong Kong and Singapore the natural hubs for Asian wealth.

Many Swiss banks expanded in Asia in the past two to three decades to serve the region’s growing number of wealthy clients, helping pioneer the private-bank model there.

But bankers say political shocks in the region, such as the imposition of a strict new national security law in Hong Kong in 2019, followed by Russia’s full-scale invasion of Ukraine, have heightened concerns among Asia’s rich about the security of their assets.

Christian Cappelli, head of the Asia desk at Julius Baer in Zurich, said that back in 2010, the requirement of Asian clients to book in Switzerland was “very small”.

“There was no benefit. Booking in a place such as Singapore was just as good,” he said. That has changed since 2019.

“Clients increasingly felt that, geopolitically, things were less predictable, and therefore it was important to have assets in different jurisdictions,” Cappelli said.

Christian Frie, head of Asia-Pacific business in Switzerland for LGT Private Banking, said Switzerland had become the “booking centre of choice” for Asian clients outside the region.

“Most Asian clients we see allocate around 10 to 15 per cent of their assets outside the region, and in some cases more. When they choose a place outside Asia, they tend to pick Switzerland,” he said.

Another executive for a Swiss private bank said the “non-dom” tax rules in London had reduced the UK’s appeal for Asian clients who had long been drawn there, especially for their real estate portfolios. “Non-dom” refers to UK residents whose permanent home or domicile for tax purposes is outside the UK. They do not have to pay tax to the UK government on money made outside the UK.

“Switzerland was a beneficiary of that,” the person said.

Banks have expanded their Asia desks in Switzerland in response.

Julius Baer has had an Asia desk onshore in Switzerland since the 1990s, but has stepped up hiring significantly since 2022. UBS’ Asia desk now has more than 100 people, said sources, while LGT’s Asia desk has grown from fewer than 10 people in 2023 to nearly 30 in Zurich and Geneva. 

Frank Niedermann, UBS’ head of wealth management for Asia-Pacific Switzerland, said some family offices from Hong Kong and Singapore now “want an Asia and a European HQ”.

But he cautioned that part of Switzerland’s allure still required demystifying. “There is that magic of a Swiss account, but we need to explain what that actually means,” he said.

“We know, for example, when it comes to equity trading, we cannot be competitive with places like Hong Kong because of the stamp duty. But there are other strengths.” FINANCIAL TIMES