Italian private banks in Switzerland head for exit
Published October 03, 2010 | Reuters
By Ian Simpson
MILAN, Oct 3 (Reuters) -Italian private banks are exitingSwitzerland
in increasing numbers and could leave altogetherbecause of a crackdown
on tax evasion back home, stiff scrutinyof bank secrecy and poor
returns after the financial crisis.
In the past 18 months, around eight lenders in theItalian-speaking
canton of Ticino have closed or been sold, halfof them Italian-owned.
In the most recent departure, Italian insurer Fondiaria-SAISpA <FOSA.
MI> sold its Banca Gesfid private bank toSwitzerland's PKB Privatbank
AG last month for 134 million Swissfrancs ($136.6 million).
"The major Italian banks, I think they sooner or later willgo away
and close down or just sell themselves to other people,"said PKB Vice
Chairman Fernando Zari.
"The banks that have been passing from one hand to anotherare all
Italians, and this trend should continue, in my opinion.I think it's
the thought of practically every bank in Lugano,"Ticino's capital, he
added Ticino, just across the border from Italy, has served as aneasy place
for Italians to stash their money offshore. Itsbanking association has
almost 40 members, with Italian namesprominent. The trade group last
year put its members' assets at$390 billion.
But the cash-strapped Italian government's crackdown on taxevaders --
including police searches of Italians enteringSwitzerland and roadside
cameras recording car license plates atthe border -- has lessened
Headed by Economy Minister Giulio Tremonti, authorities havetightened
controls after Italy's most successful tax amnesty onmoney abroad.
In the amnesty, concluded in April, led to the declarationof 97
billion euros ($132.5 billion) abroad -- much of it inSwitzerland --
and the return home of 39 billion euros.
LITTLE BANKS, BIG BANKS
"What you have is an incompatibility between Italianregulation and
the banks' presence in an offshore" bankingcentre like Switzerland,
said Bruno Chastonay, a Luganofinancial analyst and commentator.
The banks also have been hit by a drop in revenues since thefinancial
crisis as wealthy clients prefer to hold on to cash orstay out of
markets, he and other observers said.
Italians facing a slow recovery from the worst recessionsince World
War Two also have less money on hand to invest,which cuts into
commissions and other revenue streams at banks.
Profits at BSI, Ticino's oldest bank which is owned byItalian insurer
Assicurazioni Generali SpA <GASI.MI>, fell 24percent in the first half
of the year. Assets under managementslipped 3.5 percent to 75.4 billion
Swiss francs ($76.9billion).
Italian banks' dwindling presence "has a lot to do with thecost-to-
income ratio. It's very simple; it just hasn't made anysense from a
strategic point of view" to have small units inTicino, said Martin
Maurer, general director of the Associationof Foreign Banks in
Italy's biggest bank, UniCredit SpA <CRDI.MI>, sold itsSwiss unit in
July to its management for 57.5 million Swissfrancs. The operation,
with 2.2 billion Swiss francs undermanagement, had reported an 18
percent drop in gross profit lastyear.
Alessandro Profumo, recently replaced as UniCredit chiefexecutive,
told reporters last month: "We're really big ononshore activities and
small in offshore. We're focusing on thefirst."
Marco Mazzoni, head of the Magstat financial consultancy inBologna,
said Italian banks in Switzerland were being forced torethink their
future. "I'm convinced that the closings, acquisitions and mergersin the
Lugano market will continue over the next two years aswell because the
future of tax havens has changed," he wrote ine-mailed comments.
(Reuters will hold the Global Private Banking Summit 2010from Monday
to Wednesday in Geneva, Singapore and New York.)
(Reporting by Ian Simpson, editing by Jane Baird)