A study by the Swiss Bankers Association has revealed that banks in the country hold just under a third of the world's private wealth deposited abroad, showing that this is still the preferred location for the world's wealthy to secure their offshore capital.
<p>The report looked at Switzerland's 200 largest banks, which include UBS, the world's largest wealth manager, and Credit Suisse, another top-10 company. According to the results, Switzerland was the world leader in international private wealth management at the end of 2005, with a market share of 28%.<br /><br />The country also had 9% of global assets under management, placing it among the world's leading trio of wealth managing centers, including the US and the UK. Including all client assets managed or deposited in domestic and foreign branches, Swiss banks' global assets under management amounted to $5.9 trillion.<br /><br />The report suggested that Switzerland is such a popular wealth management center because of its predictable regulatory environment and its strict laws on banking secrecy. It also commented that the industry in the region looks set to grow as international banks expand their wealth management operations into Switzerland because of its standing. <br /><br />The study revealed that gross margins in the area had been stable, despite increasing competition, with 80 to 120 basis points on assets under management. Despite their thriving economies, and increasing numbers of wealthy Asian clients, Hong Kong and Singapore secured only 4% and 3%, respectively, of global assets under management.<br /><br />The report concluded that Switzerland's banks owe their success to the strategy of becoming global, in addition to capitalizing on the success of their domestic market. It referred to Switzerland as a 'global benchmark' in the global wealth management industry. <br /><br />The report did, however, state that this prosperity could not be guaranteed in the future: Wealth managers, particularly smaller players, are exposed to periodic market downturns translating into falling asset-based revenues and sticky overhead costs, it warned.</p>