Tags: Credit-Suisse | Emerging | Rich | Old | Money

Credit Suisse: Emerging Rich Replacing Old Money

Tuesday, 14 Sep 2010 11:07 AM

Credit Suisse Group AG, Switzerland’s second-biggest bank, is keeping its 2012 target for net new assets at its wealth business as emerging markets counter slower growth in western Europe.

The unit aims to attract 175 billion francs ($174 billion) to 225 billion francs of net inflows by the end of 2012, the Zurich-based bank said 12 months ago. Credit Suisse has attracted more than 100 billion francs since 2008, with over 60 percent of that outside Switzerland, Walter Berchtold, head of private banking, told journalists in Zurich on Tuesday.

“We are more or less sticking to our target,” Berchtold said after the presentation. “We have reduced western Europe slightly” as growth will be dampened by discussions around banking secrecy, he said.

Credit Suisse is luring new clients in Asia, the Middle East, Latin America and eastern Europe, as growth in wealth management shifts to emerging markets, Berchtold said. Swiss private banks, which manage an estimated 27 percent of the world’s offshore wealth, are under pressure after attacks on secrecy by the U.S., France and Germany led to greater scrutiny of their customers’ tax affairs.

“Until the question surrounding banking secrecy has been solved, Switzerland will only grow moderately, especially with the western European neighbor states,” said Berchtold. “We have to solve this problem.”

Withholding Tax

Credit Suisse, which holds about 100 billion francs in offshore assets from Germany, France, Italy and the U.K., said in February that it could lose between 25 billion francs and 35 billion francs if all western European countries started tax amnesties as “aggressive” as the Italian “Scudo” in the coming years.

Almost half the 11.9 billion francs of net new assets attracted by Credit Suisse’s wealth unit in the second quarter came from the Europe, Middle East and Africa region with another 3.1 billion francs from Asia. Switzerland and the Americas both saw net inflows of 1.6 billion francs, the bank said in its quarterly report in July.

Berchtold said Switzerland needs the support of neighboring states for a withholding tax proposed by the country’s banks. Germany is “open” to the tax on interest, dividends, capital gains and investment income, where client identities would remain secret, Swiss President Doris Leuthard said on Sept. 3.

The two countries are negotiating a tax treaty that will clarify the status of private bank accounts held by German nationals. Germany’s willingness to use stolen data to identity tax evaders has created tension with the Alpine nation and last month German prosecutors probing undeclared assets began questioning clients of Credit Suisse.

‘Forward-Looking Solution’

“We need a solution for the past, however it may look, to normalize the money,” said Berchtold. “We also need a forward- looking solution and there we certainly will envisage an extension of the withholding tax which we already have with the EU, if need be on dividends but also on capital gains.”

German nationals are the biggest clients of Swiss wealth managers, accounting for a quarter of the estimated 726 billion Swiss francs of untaxed money invested in Switzerland, PricewaterhouseCoopers partner Hans-Ulrich Lauermann said at a conference on Sept. 1. Switzerland has since 2005 imposed a 35 percent withholding tax on interest income for some European Union countries.

Dusseldorf prosecutors, who searched Credit Suisse’s offices in the country in July, last month sent about 1,500 letters with questionnaires asking clients for detailed information about how they chose to open an account with the bank and who advised them.

Berchtold said Tuesday that there was no news on the investigation.

Credit Suisse has said that it’s cooperating with relevant governmental authorities in the German data matter and has filed criminal charges against individuals who committed the data theft, who are currently unknown.

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Credit Suisse Group AG, Switzerland s second-biggest bank, is keeping its 2012 target for net new assets at its wealth business as emerging markets counter slower growth in western Europe.The unit aims to attract 175 billion francs ($174 billion) to 225 billion francs of...
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