Rahn & Bodmer, Switzerland's second oldest bank, started as a silk trading house in Zurich in 1750 that also sold promissory notes, a business that was so successful it formally gave up the cloth trade to focus on banking 55 years later. In the 19th century, the private banks set up commercial banks that in turn were able to finance the industrial revolution. The bank expanded rapidly after World War Two, surviving waves of market consolidation to carve a niche for itself as a partnership private bank specialised in tailored investment services. Over the last ten years the bank has built up a young team of partners, aged between 35 and 48. Staff have increased by 20 per cent to 180, to feed IT and compliance needs as well as meet demands for more account managers, and assets under management have tripled to SFr10bn in 2001. "It would be boasting to say we offer something other private bankers do not. We are offering a highly personalised banking service. We want clients to have a long-term relationship with their account managers who get to know them and their needs very well," said Christian Rahn, 45, one of five partners. The Zurich bank does not offer a selection of portfolio models but rather designs each portfolio individually depending on the clients' requirements and philosophy. "Some of our clients go back five generations of the same family. Some are conservative, some are liberal, some socialists and some have a strong environmental bent," he said. About 90 per cent of clients are private while the rest are institutional. The bank also engages in global custody and broking via its own order management system with direct access to the Swiss and other bourses. A few clients trade directly via Rahn & Bodmer's online banking service, where each transaction is monitored electronically for errors to ensure risks remain within a set limit. Christian Rahn said approximately 60 per cent of the investments are in stocks, mutual funds and a handful of alternative investments. The majority of these investments are Swiss blue chip shares for which an in-house team does the research, while analysis on foreign securities is brought in externally. "We have had a constant inflow of new assets-not a steep one, since we don't have a strong media presence because new clients are often being referred to us by existing clients, lawyers and other third parties," he said. "This year profits are not as good as last year but then 2000 was our best year ever. But this year is still good. Compared to other sectors we have no reason to complain," he said. Some 15 per cent of assets under management are in cash and 25 per cent in fixed income products. The remaining 60 per cent is in equities. About 30 per cent of all accounts are discretionary, which means asset managers may invest without consultation. The rest entail some level of involvement on part of clients, some want a written proposal each time and some only a phone call and some a detailed explanation. Like many traditional partnership banks, Rahn & Bodmer saw an influx of new clients after the 1998 big bank merger between UBS and Swiss Bank Corporation because many investors wanted a more personal service from a private bank. Some 60 per cent of clients are foreign, mainly from Germany, the UK, Netherlands, Italy, Spain, Portugal and Asia, while most assets are Swiss-held. The bank does not offer in-house products but prefers to buy funds from third parties for a wider choice. Over the last four years the investment strategy has shifted to mutual funds, which account for nearly a quarter of stock market investments. This has been the best way of catering for investors looking for exposure to Far Eastern or emerging markets and clients generally have wanted to invest more globally. Alternative investments are also a relatively new area where the bank is gaining expertise and could expand, Rahn said. These account for between one and three per cent and are mainly low exercise price option instruments, with a sprinkling of hedge funds and private equity investments. "Our clients in general do not live off the assets we manage so we can adopt a long-term investment strategy. This, and taxes, are why the percentage of shares is higher than might be expected," Rahn said. Clients were offered online access to their accounts 18 months ago and about seven per cent have registered so far. They can view their custodial and current accounts, transfer payments and benefit from most retail banking services although the only loans available are secured by securities. Charges clients pay are an annual administration fee of up to 0.275 per cent, an annual fee of up to 0.5 per cent for discretionary accounts as well as commissions on trades. There is no minimum investment but to create a diversified portfolio one needs about SFr200,000. "You can't have big clients without small ones. You can't reject small clients because they might refer other clients to us or you might be considered a snob." The bank has had a tax and inheritance department since World War Two, better known today as a family office, which was designed to provide pension and fiscal advice as well as other services. It was Christian Rahn's great-grandfather, Louis, who was bought in as partner in 1882 and who lent his name to the firm that is also Zurich's oldest bank. Today it is run and owned by three families. The other partners are Rahn's brother, Peter, 48, since 1990, two other brothers: Martin Bidermann, 43, since 1990, and Christian Bidermann, 35, since 2001 and Andre Bodmer, 40, who has been a partner since 1995. The bulk of the partners' family fortunes is invested in the bank and they take unlimited liability as in all traditional partnership private banks. The five partners are also involved in client counselling on individual portfolios.