A strong 2021 for private banks, but headwinds are mounting

Assets under management rose last year to a record high of CHF 373 billion to a total of CHF 3,263 billion, according to the study “Clarity on Swiss Private Banks” by KPMG and the University of St. Gallen.

  • Record growth in assets under management from CHF 373 billion to a total of CHF 3,263 billion and strong profit growth. The main drivers of this development were the record high net new capital inflows and the very positive financial markets.
  • Growing focus on the “Big 8”. Due to the strong growth, these represent 80% of the assets under management of the analyzed banks. Along with UBS and Credit Suisse, the “Big 8” are destined to dominate the private banking sector in Switzerland in the long term.
  • Growing geopolitical and macroeconomic challenges and uncertainties are widening the gap between well-positioned private banks and weak private banks, while accelerating the consolidation process.

2021 was a golden year for private banks in Switzerland. Assets under management rose last year by CHF 373 billion (12.9%) to CHF 3,263 billion. Net new capital inflows of 131 billion and a performance of 234 billion due to very positive equity and currency markets were major contributors to this growth. Around 91% of banks saw their assets under management increase in 2021, with the median seeing record growth of 13.7%. Gross profit in 2021 was 5.8 billion and revenue was 19.7 billion. “These figures show that Swiss wealth management has mastered the major challenges and successfully defended its status as the world’s leading wealth management center,” comments Christian Hintermann, study director and financial services partner at KPMG Switzerland.

Despite these excellent results, the gap between weak and strong private banks continues to widen. Despite a very benign environment, the number of banks suffering operating losses has increased sharply over the past three years. The average return on equity (median) was 10.1% for strong banks and -2.0% for weak banks. “Strong banks are showing great resilience in a significantly deteriorating macroeconomic environment. The uncertain economic environment will pose a major challenge for weak and medium-sized banks, which will once again lead to an accelerated decline in the number of private banks,” adds Philipp Rickert, Head of Financial Services at KPMG Switzerland.

The “Big 8” will permanently dominate the Swiss private banking sector

With the relaxation of banking secrecy and the promotion of tax transparency through automatic exchange of information, many private banks have made both strategic and operational improvements and invested in realigning their business. The success was there: With the exception of UBS and Credit Suisse, a group of eight large Swiss private banks increasingly stands out, which generates almost 80% of the assets under management of the analyzed banks and almost 90% of the gross profit.

“This strong growth is the result of continued market success. Thanks to better customer service and above-average performance, the Big 8 have managed to retain existing customers, increase the share of wallet and win new customers,” explains Philipp Rickert. Crucially, this success allows these banks to hire the best people and continuously invest in quality services, bespoke products and digital initiatives. Banks can thus stabilize their profit margins in a highly competitive market.

The number of private banks in Switzerland decreased from 99 at the end of 2020 to 92 in June 2022. The strong transaction momentum with ten M&A operations in the first quarter of 2022 came to a standstill due to uncertainties related to the interwar Russia and Ukraine, rising inflation and interest rates as well the fear of an impending recession.

The independent wealth management industry on the eve of fundamental transformation

The Swiss Independent Asset Managers (IAM) sector has also developed well in recent years. 37 of the largest IAMs manage client assets of over CHF 100 billion, which is more than the 69 billion client assets of the 29 small private banks included in the study. However, the IAM market is changing with increasing regulatory requirements, growing interest in private equity from foreign investors and an aging pool of advisors who are about to retire.

By the end of July 2022, only around 400 of the 2100 VVG had received a license from Finma under the Federal Law on Financial Institutions (LEFin). “Most IAMs are very small businesses that, given the current timeframe, are more likely to sell their business than apply for a license. This could lead to a significant increase in M&A activity or the disappearance of many small players,” explains Christian Hintermann.

Outlook: The headwind of the next few years will accelerate the consolidation process

After many years of rising prices on the financial markets and after ten years of negative interest rates, inflation is back and interest rates are rising. The group of strong private banks is well positioned to counter the headwinds, which are clearly amplified by an increasingly likely economic stagnation or even recession. However, the pressure on the weaker banks, which have been able to benefit from a rise in the stock markets for a record-breaking amount of time, will increase significantly and they must act. KPMG Switzerland expects that this new reality will increase the need for consolidation among the weaker Swiss private banks and that we will see a new wave of market withdrawals as well as increased market concentration.


In their annual Clarity on Swiss Private Banks study, KPMG and the University of St. Gallen (HSG) examined 76 private banks operating in Switzerland and 11 in Liechtenstein and evaluated the performance of these institutions and key industry trends.

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