Few Swiss banks have seen such spectacular growth as Sarasin & Co., the mid-sized private partnership, which has doubled assets under manage...

Few Swiss banks have seen such spectacular growth as Sarasin & Co., the mid-sized private partnership, which has doubled assets under management to SFr40bn since 1997 thanks to an aggressive drive to seek out new clients without marring its genteel image. Eric Sarasin, one of ten partners, opened a new office in Geneva in 1997 to head a separate new international private banking section. The operation started with a team of eight account managers hired from Coutts and "zero" assets. Now it has assets of SFr3bn both with institutional and private clients, a staff of 50 and has just moved to a bigger office in Geneva, Switzerland's traditional private banking hub. He said that recent growth was largely due to the success of its international private banking business, which grasped a market opportunity at a time when markets were also robust. Sarasin's strong team and aggressive strategy helped win new clients. Sarasin himself spends several months each year flying around the world recruiting a network of lawyers and investment advisers to refer wealthy nationals in their countries to Sarasin and meeting potential clients face-to-face in Europe, Asia and the United States. "As a partner, I don't see myself looking down at everyone from an ivory tower. I'm very much involved with 50 per cent of my time for clients. I'm lucky to be in the fourth generation and to have the name carried by the bank. When I sit opposite clients the effect is greater than if I were the director of a large bank. That's a key competitive advantage," he said. Sarasin is seeking out possibilities to cooperate with a bank in Italy, one of the key markets the bank hopes to exploit, but the firm is also targeting Germany, France, Benelux, the Iberian peninsula and the UK. "Some regions in Italy are extremely wealthy, but the banks there have no expertise in private banking and that is where we come in," he said, declining to name the bank. Unlike Credit Suisse Private Banking and UBS Private Banking, Sarasin has decided against pursuing an onshore strategy to capture Europe's newly created wealth that tends to be more declared than in the past. Eric Sarasin said this was not in contradiction with the bank's global drive. "We decided not to go onshore in Italy, but also other countries," he said. The firm opened new offices in Switzerland and London instead. "We believe it is very costly to be onshore. You have to be able to provide all services onshore. A lot of clients still prefer to come to Switzerland, not because they are tax evaders, but because of our know-how. We've done studies that found we don't have the capacity to go fully onshore," he said. Sarasin was doubtful the onshore strategy of even the big banks, such as Credit Suisse, world work. The banking giant recently recruited private bankers in Germany en masse. "Credit Suisse moulded them into private bankers but there are some aspects of private banking you can't teach, it's something you are born with," he said. Sarasin's offshore strategy for foreign clients, however, did not mean the bank accepted more undeclared funds than other banks. "The majority of our clients bring us declared funds and we go actively seeking after declared funds". Clients in the US are also keen to bank offshore in Switzerland because they feel their money is in a safer place and that this would reduce the risk of "exposure to possible blockage of assets and regulation". The private bank is also keen to expand its family office strategy where it perceives there is a gap in the market. A typical private client portfolio will consist of 30 to 35 per cent stocks reduced this year from 50 per cent, ten to 15 per cent cash and the rest in bonds. Virtually all are in-house products, selected from Sarasin's 18 mutual funds while US equities are purchased from third parties and these are selected and monitored by Sarasin's Fund Lab. Sarasin, which pioneered pro-environment and socially aware investments known as sustainable investments, offers a range of funds investing in companies that promote the environment in some way or treat their staff and stakeholders well. It opened Switzerland's first environmentally friendly fund in 1994. In private banking as a whole, stocks constitute about 35 per cent of assets under management, cash—ten per cent, and bonds about 55 per cent. These figures are for private banking as a whole, the figures in paragraph above are how Mr Sarasin perceives an average client portfolio but you may like to choose the one or other way of giving an idea of make up of assets. Of those, about five per cent are in alternative investments and this is likely to grow, Sarasin said. This is a new area for the bank but one where it sees some potential. Private banking remains the core business with around SFr20bn in assets. Institutional clients, mainly Swiss and overseas pension funds, account for SFr12bn and the investment funds business accounts for SFr8bn. The vast majority of Sarasin's private banking clients have an average of between SFr1m to SFr2m, and it also caters for a number of foundations. The bank is acquiring an increasing number of high net-worth individuals with between SFr2m and SFr10m who feel "neglected by large banks", he said. After the most buoyant period in its 160-year history, the Basel-based bank is suddenly facing an old problem: how to preserve capital. "Clients started coming to us and asking us if we would just make sure they don't lose anything," Sarasin said. Very weak market conditions in 2001 mean that last year's record year will not be matched and Sarasin expects a slight decrease in assets under management as a result. "We had assets under management grow in private banking over the past three years on average between 15 per cent and 20 per cent, and we expect this rate to decline for the next three years to between eight per cent and ten per cent," he said. He repeated denials that the bank was for sale-UBS has been mentioned as a possible suitor-and that such "unfounded" rumours were based on a misunderstanding over the bank's reassessment of its structure. The number of private banks was mushrooming but quality was not good. "It is not that the services are not good, on the contrary, but they have difficulty getting top professionals and therefore the quality of the portfolio management services are not top. Furthermore, they often do not have the means to invest enough on the technology side." The bank would consider a purchase if the right opportunity came along but is not actively looking. Organic growth was preferable to growing by acquisition, he added. Bank Sarasin has a unique structure. It is a partnership private bank but 75 per cent of capital is in B shares traded on the stock market, while the ten partners hold the remainder in A shares and 65 per cent of voting rights so therefore retain control of the firm. But like its 16 fellow traditional partnership private banks that are not listed and therefore are not obliged to publish their balance sheet or reveal profit figures, Sarasin's partners have their own fortunes invested in the bank and take unlimited liability. It was a review of this mixed structure that prompted speculation the bank was on the verge of takeover. But Sarasin said it was mistaken to think the bank could easily be acquired because the partners still held the majority of voting rights.