Rothschild Group’s wealth management unit in Zurich intends to meet its targets for increasing assets by focusing on the more established onshore European markets to cope with the assault on Swiss bank secrecy.

Rothschild Group’s wealth management unit in Zurich intends to meet
its targets for increasing assets by focusing on the more established onshore European
markets to cope with the assault on Swiss bank secrecy, according to Bloomberg.

The report focuses on the fact – as has been noted by WealthBriefing in a recent feature –
that the probable demise of secret Swiss banking is squeezing margins of banks
that have traditionally made money in this low-maintenance sector. But as banks
must provide more added-value to clients in a more transparent world, they must
reinvent their business models to stay ahead, industry figures say.

“The onshore markets are the fastest-growing markets in our
bank,” Thomas Pixner, head of private clients at Rothschild Wealth Management
and Trust, was quoted as saying in an interview with the news service.
“Everybody told us four years ago ‘forget about old markets; you can’t grow
anymore,’ but we’ve created a lot of growth.”

Rothschild aims for “high single-digit” percentage annual
growth in assets under management from the €11.8 billion ($15.9 billion) logged
at 31 March, the report continued.

Rothschild expects to win new clients as German
entrepreneurs sell businesses over the next 10 years, the service quoted
Riccardo Petrachi, who was hired this year from UBS to head the bank’s
ultra-high- net-worth unit, as saying. The UK is also an important market for
the firm.

(WealthBriefing understands that the
firm is also concentrating on entrepreneurs selling their businesses
across all of these markets, rather than just in Germany).

At least half of the Zurich
wealth business is in cross-border accounts held by clients from countries
including the UK, Spain and France, the report said. Pixner was
quoted saying that some customers have asked to transfer money to onshore
accounts.

Tax disclosure details between Switzerland,
Germany and the UK could mean
up to SFr47 billion (around $51.5 billion) could leave accounts in the Alpine
state, squeezing its economy, according to consultancy Booz & Co in a
report last week.

In the UK-Swiss agreement, signed in September, holders of
offshore accounts in Switzerland
will pay a one-off charge of between 19 and 34 per cent of funds to settle old
tax bills. Swiss banks will pay the UK an up-front sum of SFr500
million. The agreement takes effect in 2013, subject to legislative scrutiny in
the UK and ratification by Switzerland.
Negotiations on the issue started in October last year.

From 2013, a new withholding tax of 48 per cent on
investment income and 27 per cent on gains applying to those who have not
previously disclosed these assets will ensure the effective future taxation of UK residents
with funds in Swiss bank accounts. The new charges will not apply if the
taxpayer authorises a full disclosure of their affairs to HMRC.

The German deal with the Swiss authorities follows broadly
similar lines to the UK
one.

However, a European Commission challenge this week to the UK and German
tax deals means they are far from certain. The EU’s tax commissioner, Algirdas
Semeta, says the agreements cut too far into the EU’s remit over such issues.