GENEVA: Crisis and revolution in Middle Eastern and North African countries have increased the amount of money flowing into private client accounts this year, Geneva-based HSBC Private Bank (Suisse) said on Monday.
"This is a client group that has always been very international (i.e. kept money abroad) … but it’s true we are seeing a certain upturn in activity," Chief Executive Alexandre Zeller told a news conference in response to a question on the subject.
He would not quantify the increase, but said it was "nothing staggering."
Zeller was presenting the 2010 results of the bank, a subsidiary of No.1 European bank HSBC, whose focus is on managing the money of wealthy people.
The net inflow of funds from the Middle East and Africa was positive already in 2010, at 700 million Swiss francs ($760 million), he said.
But the bank bled money in Europe. Net new outflows rose to 1.6 billion francs from 600 million in 2009.
Zeller said the data theft scandal that enveloped the bank a year ago had been "a factor" in this outflow, as was an Italian amnesty on untaxed assets that took place in April last year.
In February Swiss markets regulator FINMA reprimanded the bank, saying a lack of safeguards led to the theft of data on thousands of clients by a former employee.
Including inflows and outflows from other regions and other factors, net new money inflows were 8.5 billion francs ($9.2 billion), driven by a 5 billion franc net inflow of money from Asia. Zeller said this trend "would continue" and was in large part wealth originating from mainland China.
The continuing strength of the franc and low interest rates were the main factors in a 26 percent drop in 2010 profit before extraordinary items and tax to 581 million Swiss francs. The bank’s parent HSBC has already reported its 2010 results.
Swiss franc strength hurting
Zeller said franc strength, particularly against the dollar, was taking a heavy toll. Most of the bank’s costs are in Swiss francs while its revenue is more dollar-sensitive than that of other Swiss private banks because of its focus on emerging markets.
Every cent of devaluation of the dollar against the franc costs the bank 6 million francs in profit, he said.
The franc reached a record level against the dollar earlier in March and ended 2010 12 percent above its 2009 average level against a basket of 40 currencies. –Additional reporting by Robin Bleeker
