Bank Sarasin nears CHF100bn asset level in challenging markets

In one of the most difficult operating environments for Swiss private bankers in recent memory, Bank Sarasin today welcomed approval for J Safra Holding to buy a majority stake, while announcing it would soon cease business with some foreign clients who refused to provide it enough information regarding tax.

Announcing the approval for Safra to buy a majority stake, from Rabobank, along with its first half results, Sarasin said it would continue with cost-cutting measures in a climate where investors are “still standing on the sidelines”.

It described the first quarter as “difficult”. This year to June its assets were CHF 99.1bn, and in the period it took in CHF500m of net new business. Market gains grew assets by CHF1.9bn, while the Swiss franc’s weakening versus the US dollar added positive currency translation effects of CHF300m.

Operating income at the group fell by 9% to CHF330.3m. The bank said “structural pressure on earnings calls for a cautious approach”.

The investment climate is not the only pressure being faced by Sarasin and its Swiss rivals. It is also under growing pressure regarding its non-local clients not declaring taxable monies at the bank to their local tax authorities – be they in Europe or the US.

Sarasin said it would stop dealing with any client if the bank could not complete tax-related due diligence on him or her by the end of this year or if the client “refuses to handle their assets in accordance with the tax rules applicable in their country of domicile”.

Bank Sarasin will not apply this approach to residents of countries where Bern has already a double taxation agreement providing for a final withholding tax.

The decision by Sarasin suggests the bank does not believe the process of tax agreements being effectively forced on Bern is complete.

Against this backdrop, Sarasin welcomed the go-ahead for Safra to take a controlling stake, bought from Rabobank.

Joachim Straehle, CEO of Bank Sarasin, said: “The Sarasin Group’s financial performance for the first half of 2012 reflects the macroeconomic environment. In addition, the implementation of our strategy focusing on tax-compliant assets was of particular importance for us in the reporting period. After completion of its implementation the Sarasin Group will be in an even stronger position for the future.”

It will spend money on recruiting new relationship managers in a bid to win new clients. It said new business growth would “remain positive, but at a slightly slower pace than in previous years”.

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