PwC’s Market Update on the Swiss Private Banking Sector 2019
The year 2018 proved to be challenging for Swiss private banks. The global equity market downturn in Q4 led to a significant decline in assets under management and profits. Swiss private banks reported a median return on equity of 4%, significantly lower than the sector’s average cost of capital. Only 20% of banks achieved a return on equity of 10% or more in 2018. Small private banks in particular are struggling, clearly illustrated by a cost/income ratio of over 100% for the first time in our records (median).
Maintaining momentum: seven deals in 2018
| Announced | Target | Stake | Buyer | Seller | Purchase price | AuM |
May 18 |
Notenstein La Roche Privatbank AG |
100.0% |
Vontobel Holding AG |
Raiffeisen Schweiz |
CHF 700m |
CHF 16.5bn |
Jul 18 |
MM Mourgue D'Algue & Cie |
100.0% |
Gonet & Cie, Banquiers privés |
Private individuals |
n/a |
CHF 1.0bn |
Jul 18 |
Schroder & Co Bank AG (Eastern European Portfolio) |
Asset deal |
CBH Compagnie Bancaire Helvétique SA |
Schroder & Co. Bank AG |
n/a |
CHF 0.7bn |
Sep 18 |
Banque Paris Bertrand Sturdza SA |
40.0% |
Investcorp |
Private individuals |
n/a |
CHF 5.3bn |
Sep 18 |
Berenberg Bank (Schweiz) AG |
80.1% |
Private individuals |
Joh. Berenberg, Gossler & Co. KG |
n/a |
CHF 6.8bn |
Oct 18 |
Lombard Odier (US Portfolio) |
Asset deal |
Vontobel Holding AG |
Lombard Odier |
n/a |
CHF 0.6bn |
Nov 18 |
Sallfort Privatbank AG |
100.0% |
Banque Heritage S.A. |
Private individuals |
n/a |
CHF 1.13bn |
Largest decline in AuM since the financial crisis
The 2018 stock market downturn resulted in the largest decline in assets under management since 2008. However, considering the rapid recovery of the market in early 2019, we expect many private banks to have quickly compensated these losses.
Small private banks in the centre of the storm
For the first time, the majority of small private banks (those with less than CHF 2bn in assets under management) are reporting an operating loss, indicated by a cost/income ratio of above 100% for this sector. Compared to mid- and large-sized private banks, smaller players seem to often lack the size to operate profitably.
“2018 has been a tough year for most Swiss private banks. Consolidation has remained relatively high, especially amongst small players. We expect this trend to continue in the near future.”
