An Italian tax amnesty will drain top Swiss wealth managers UBS, Credit Suisse and Julius Baer of as much as $18 billion in client withdrawals, hitting already weakened offshore banking and heralding more mergers, analysts believe.
The success of Italy's amnesty means UBS, which is struggling to win back money from wealthy clients after a damaging US tax row, will suffer higher money outflows in the fourth quarter than in the previous one, Morgan Stanley analysts said in a research note on Friday.
"The third Italian tax amnesty has been the most successful ...and is likely to disappoint the market's fourth-quarter expectation a little for flows for UBS," the Morgan Stanley analysts said. They expect UBS clients to have withdrawn between 3 and 7 billion Swiss francs due to the amnesty, pushing forecasts for total client withdrawals to 20 billion francs ($19.6 billion), up 8 percent from the previous quarter.
Rival Credit Suisse is also expected to have lost between 3 and 7 billion francs in the amnesty, while withdrawals at Julius Baer could total between 1 and 4 billion francs, the research note said. Morgan Stanley still expects new client inflows to grow around 2 percent at Credit Suisse in the fourth quarter and 2 percent at Baer in the second half of 2009 as the banks win clients outside Europe.