While acknowledging a "difficult" year lies ahead, many of the banks for which Switzerland is renowned say they have been spared the worst of the global credit crisis and see no need to cut bankers' pay. Geneva, the second-largest Swiss city, is home to more than 140 banks - many of them small in size and conservative in approach - catering to the world's richest people.
Ivan Pictet, senior managing partner of the exclusive bank Pictet & Cie, said on Tuesday that Geneva's financial district had so far weathered the market turmoil that has gripped big Swiss banks such as UBS and Credit Suisse. About 60 percent of banks in Geneva with more than 200 employees expect a "difficult" 2009, but smaller and boutique institutions have a more positive outlook, according to a survey by the Geneva Financial Centre, a local industry association.
Among banks with 50 to 199 employees, 60 percent said they expected a "stable" performance next year, and 46 percent of those with up to 49 employees forecast a "good" 2009.
Pictet, who serves as president of the association, said it was important for Geneva's banks to retain and recruit talented bankers in spite of the chaos that has gutted investment banks in New York, London and elsewhere. Though noting "excessive remuneration" and bonus schemes that rewarded risk-taking might have contributed to the steep rise and fall of financial markets, Pictet said it was important not to tie banks hands over pay.
"It would be quite dangerous to apply overly strict rules, which would undoubtedly cause talent that we need to leave for other financial centres," he said in French. Blaise Goestchin of Banque Cantonale de Geneve (BCGE) said his bank and its local rivals had not altered lending and financing requirements following the market mess, rooted in complex and over-zealous mortgage lending in the US. "For our part, we believe that there is no credit crisis in Geneva, nor elsewhere in Switzerland. We have not seen that commercial banks have become more selective so far," he told the news conference.
Still, both banking executives said a downturn in the global economy, particularly if it affected Switzerland's key export partners, was bound to have a damping effect. Commodity traders and financiers based in Geneva could also see their strong results threatened by the slide in oil and other markets, alongside the financial turmoil and growing recession fears, they said.
Major institutions such as HSBC, Deutsche Bank, J.P. Morgan, Standard Chartered and Barclays have offices in Geneva catering to some of the world's wealthiest people, many of whom live elsewhere. The best-known private banks headquartered in Geneva include Lombard Odier Darier Hentsch, Mirabaud, and Bordier.