Bankers warn of long crisis as rich seek comfort

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HSBC Regional CEO for Global Private Banking in EMEA Alexandre Zeller gestures during the Reuters Global Wealth Management Summit in Geneva October 5, 2011.

Credit: Reuters/Denis Balibouse

By Chris Vellacott

LONDON | Thu Oct 6, 2011 9:08am EDT

LONDON (Reuters) - Private banks are telling their clients financial volatility surrounding Europe's debt crisis will continue for at least a year as more of the continent's rich seek the comfort of household names or state backing when choosing where to bank.

"We are telling (clients) very honestly nobody knows how this is going to evolve and you have to be extremely careful in terms of your exposure," said Alexandre Zeller, head of private banking for Europe, the Middle East and Africa at HSBC.

Pierre de Weck, wealth management head at Deutsche Bank, said during the Reuters Global Wealth Management Summit that clients could expect at least another 18 months of volatility.

"If you're short term oriented and you cannot take pain, reduce risk because we are going to have a bumpy road over the next 18 months until this European sovereign crisis is resolved," he said.

The market volatility since the summer and fears over bank solvency have boosted the kind of institution often shunned during boom times, on account of perceptions they are old fashioned or conservative, bankers said at the summit in Geneva this week

"It has been an accelerating factor in the last few weeks, we have observed a flight to safety. Banks with solid balance sheets, with conservative management and approach to the markets, are seeing significant inflows on a global scale," said Zeller,

"If you look at it more locally, state guaranteed institutions are seeing significant inflows . part-nationalized banks or those with an implicit state guarantee," he said.

James Fleming, head of the international business at Coutts, a division of part nationalized British lender Royal Bank of Scotland, tracing its origins back to 1692, said it had attracted clients in the crisis seeking comfort in its history.

"All the major financial booms and busts in last 320 years, we've navigated our clients through. And I think clients see that," he said.

Yves Mirabaud, managing partner at Swiss bank Mirabaud & Cie, said the woes of large banking groups, most recently an alleged rogue trading scandal at Swiss giant UBS, was boosting the appeal of Switzerland's family-run partnerships.

"I don't know if the fact it is a family business is a selling point ... (But) when you see how the big banks have behaved the past few years I believe that the model is stronger than ever," he said.

(Reporting by Chris Vellacott; Editing by Hans-Juergen Peters)

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