Julius Baer expects second wave of CS debut

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Credit Suisse could face a second big wave of exits, according to Julius Baer President Romeo Lacher. After the rapid withdrawal of predominantly liquid customer deposits, the focus may now be on longer-term investments.

“Securities portfolios and loans make up a much larger and more significant portion of business with retail clients. “The question now is whether this lion’s share is still moving,” Lacher said in an interview with the financial portal “Finews.”

In recent months, Julius Baer has “seen certain entries”. When asked to what extent the asset manager has benefited from client funds flowing through Credit Suisse, Lacher said it did not come from one direction and was not disproportionate.

The second wave is starting now

And it’s important to take a differentiated view, he said. “At Credit Suisse, account deposits have been the main outlet in recent weeks. These liquid deposits are very mobile and only partially protected from bankruptcy decisions.»

In such a case in Switzerland, state-guaranteed banks would be considered the first beneficiaries, Lacher said. The more significant part of the business with individual customers has seen little movement so far. Because: “Such a development takes longer: consultants consider leaving the bank to compete. As soon as they are ready to take action, they will try to take their clients with them.”

This then required more decision making on the client side and the change of institution became more tedious in practice. “It could easily take months for multi-wealth clients to fully engage in the new location.” Therefore, a second output wave is possible. “It can only begin now,” Lacher said.

Bear President gets angry at politics

Meanwhile, the bear’s chairman is reluctant to generalize the entire discussion about the pending UBS takeover of CS and the controversial size of the combined banking giant. “People talk about ‘banks’ these days. But what is meant is this: the only big bank.”

Because greatness in itself is not good or bad. For example, the size of Julius Baer is associated with a different risk profile than the size of UBS. “We have a simple business model, we just do wealth management – we don’t have investment banking, wealth management, retail or commercial business.”

Even in political discussions, not all banks should be brought together. “This bothers me personally,” Lacher said.

The Federal Council should do more explanatory work abroad

This discussion primarily takes place through the Swiss Asset Management and Asset Management Banks Association and the Swiss Bankers Association chaired by Bär CEO Philipp Rickenbacher. Lacher’s request: “We are in favor of a clear explanation of what happened at Credit Suisse first and how the recovery form used in the end came to be.” Only then should further steps be discussed.

Lacher said he wanted the government to proactively explain the reasons for the procedure and the associated consequences – not just in Switzerland, but abroad, he said. He also referred to the write-off of CS’s AT1 bonds and the measures taken to save the bank were implemented using the emergency law.

Lacher worked for Credit Suisse for a long time (1990-2017). Prior to Julius Baer’s Presidency, he was Chairman of Swiss stock market operator SIX for several years. (SDA)

Source :Blick