Nordea, the biggest Nordic wealth manager, last year designated Zurich as a hub for its global private banking. The Swedish bank has now reversed that decision.
Luxembourg, Switzerland and Singapore: the three banking centers were the choice of Sweden’s Nordea as private-banking hubs, when the company last year launched its Global Private Banking division. However, the bank has now revised its plan and decided to shutter the Zurich-based private-banking office, a spokesperson confirmed today.
The reasons for the closure are rising regulatory and IT costs in Zurich, making it no longer a business case, according to the spokesperson.
Investments in Luxembourg
The Swedish bank will make the necessary investment for the wealth-management platform in Luxembourg instead and cater to the Nordea clientele from the principality.
The decision to close the Zurich hub will affect 24 staff at Nordea. The company currently is in the process of finding solutions for the employees and will offer some of them a job in Luxembourg.
Drop in Profitability
The spokesman also said that the bank had to focus its resources. This comes as profitability at Nordea’s private banking division has sagged. Profit at the unit in 2016 declined by a fifth to 169 million euros.
Margins have narrowed along with slowing demand from customers. Nordea Private Banking has about 90 billion euros in managed assets.
One of Many to Leave Switzerland
The company didn’t provide figures for the Swiss business. The spokesperson said that assets recently had increased. The entire division recorded 1.9 billion euros in net new money last year.
Nordea is only the latest in a string of foreign banks to withdraw from the Swiss private-banking market. Since the end of banking secrecy, some 40 companies have given up doing business in the biggest offshore banking market. The newly introduced transparency for tax purposes have prompted an outflow of assets and increasing regulatory costs.
