Boost for SA as second Swiss bank plans local office

Bank Julius Baer, one of Switzerland’s oldest and largest banking institutions, has become the second Swiss private bank in as many weeks to announce its plans for operations in SA.

The 128-year-old private bank, which is listed in Switzerland and manages more than $400bn for its clients, officially launched its SA office on Wednesday. It joins the 222year-old Lombard Odier, which two weeks ago said it had been licensed to provide advisory services in SA and would be targeting high net-worth individuals who want to diversify their portfolios offshore.

The Swiss banks’ entry offers a vote of confidence in President Cyril Ramaphosa’s administration, which has focused on cleaning up corruption and turning around loss-making state-owned enterprises.

Despite an initial rise in business and consumer confidence following his election, the country slipped into recession in the second quarter for the first time since 2009.

“We believe there will be a turnaround in the current economic situation. There is a lot of economic hope that Ramaphosa has given to the people. We think if you want to be pioneering, then you have to be one of the earliest to establish a presence, even if it is not immediately attractive to do so,” said Daniel Savary, deputy global head of emerging markets at Julius Baer.

Raoul Korn, an executive director at Julius Baer, said the bank had a long-term strategy to grow its business in SA. “When we commit to a market we do so for the long term, and that means going against the grain sometimes,” he said.

High net-worth individuals who choose to use the bank’s services become clients of Bank Julius Baer in Switzerland, which is where their portfolios are administered from. But advice is co-ordinated through on-the-ground relationship managers who utilise the bank’s various specialists.

Julius Baer’s launch in SA came as Reuters reported that Credit Suisse, Switzerland’s second-largest bank, had pulled out of SA as part of a global restructuring, which has seen it scale back its investment banking offering to focus on wealth management. Deutsche Bank also withdrew a number of its services from the local market earlier in 2018, but is maintaining a physical presence offering debt capital markets, fixed income and treasury services.