Marc Pictet Interview

Marc Pictet gives his first interview with the press since taking on his new role as Senior Managing Partner on 1 July. As the 40th Partner and 8th generation of private bankers, he has taken over the reins of Switzerland’s second-largest private and institutional asset manager after UBS, with CHF 700 billion in assets under management. Pictet is a fiercely independent bank established in 1805, owned and managed by its seven Partners, with no external shareholders. Next summer, some of the 2,500 employees working at the Bank’s headquarters in Geneva will relocate to the 23-storey Campus Pictet de Rochemont, currently still under construction. Marc Pictet, now in his early fifties, faces a particularly turbulent geopolitical period.

Interview

The world is grappling with an unprecedented number of crises, along with escalating geopolitical risks. How do you steer a course in this environment?

Geopolitical risks are part of the new normal, and I don’t think many countries will make it through unscathed. Tensions between China and the United States will persist, and we will see “satellite” countries aligning around these two centers of gravity, driven by interests that may change. Analyzing and interpreting geopolitical dynamics will become more challenging. In the Middle East, for instance, the ceasefire remains fragile, as we can clearly see, and significant economic tensions are expected to persist. The world is likely to be more volatile over the next 10 to 15 years than we have witnessed to date.

Switzerland remains the global leader in cross-border wealth management, but Hong Kong and Singapore are closing the gap. What would it mean to lose this coveted top spot?

I have every confidence in the future of the Swiss financial center; otherwise, we wouldn’t be investing in the construction of a new building in Geneva, the Campus Pictet de Rochemont. Switzerland will continue to stand tall as a robust financial hub, even as we face significant challenges. The key lies in getting the various political, economic, and social stakeholders, who are crucial to Switzerland’s future success, to engage in dialogue, collaborate in a spirit of partnership, and work together to find the best ways to drive the country’s prosperity. Although the financial sector only accounts for 5% to 6% of total employment, it contributes 10% to GDP and 12% to public tax revenues, along with providing services to businesses. The mindset, distinctly Swiss, of diligently doing our job and trusting that the rest will follow may no longer be enough. We need to be much more vocal about Switzerland’s strengths.

But how?

Competing countries, for instance, organize conferences to promote their financial centers. I suggested to the new director of FINMA the idea of organizing such an event in Switzerland, in collaboration with the State Secretariat for International Financial Matters (SIF) and the Federal Council. Before we invent something new, we need to clearly communicate that we are an open and well-regulated financial center, with a stable and predictable framework, especially in the current climate of social and geopolitical tensions. Although it is not directly within its mandate, FINMA could contribute to promoting Switzerland as a financial center.

FINMA would likely argue that it already plays a role in promoting this by ensuring stability in the financial center, even tightening regulations as it has done since the collapse of Credit Suisse... 

The Swiss financial center is renowned for its integrity and diligence, and it is crucial for it to uphold these strengths while making prudent decisions. All this needs to be implemented and monitored with a considered approach. However, we should be careful about wanting to be seen as a model student, as they sometimes say in Bern. We want a solid and predictable financial center, but also one that is competitive. Let me give you an example: Basel III. Switzerland will be the only country ready for the finalized Basel III rules, which will come into effect on 1 January 2025. The United States appears to be less concerned and is leaning more toward deregulating the banking sector. Regulation can be a good thing, but being the only country to implement it is a risk.

What do you think of the popular initiative for a sustainable Swiss financial center launched on 26 November by business leaders, politicians, and NGOs? In particular, the text aims, among other things, to establish binding rules, similar to those in place in London, Hong Kong, and Singapore.

I think we need to look at what already exists in terms of sustainable finance in Switzerland before we start thinking about new constraints. Switzerland is at the forefront of sustainable finance, and the largest players will gather in Geneva during the week of 9 December for the fifth Building Bridges conference. Most market players are highly committed, and it is clear that sustainable finance is a major focus for future growth. However, such initiatives will not make the Swiss financial center more sustainable.

What changes have you implemented since becoming Senior Partner?

Change is always a long-term process at Pictet. We have a five-year planning horizon that serves as a strategic roadmap for the entire Group. Our Ambition 2025 strategic plan includes, among other things, further developing our expertise in private assets, particularly real estate and private equity, with a focus on small European businesses. These companies are often overlooked by large investment funds and seek private financial partners that are more closely aligned with them. We wanted this business to account for more than 5% of the Group’s revenue, and it now does. Asia is another major focus.

What is your ambition there?

The aim is for this region to generate more than 15% of the Group’s revenue, compared with more than 13% at present. Out of nearly 600 employees in Asia, including Shanghai and Taiwan where we are active in asset management, more than 100 are high value-added hires, recruited with a highly targeted approach. We have had a footprint in Asia for some time, as we have been in Hong Kong since 1986, in Singapore since 1995 and in Japan since 1981. Asian clients are also served by all the Group’s core businesses. Another priority of our strategic plan is to be an employer of choice, attracting and retaining talented staff across our 31 locations.

How do you see Zurich in relation to Geneva in the future?

We see Switzerland as one unified financial center. Zurich is, in a way, our second home, and we have been present there for 40 years. We are continuing to expand significantly there, but also in Basel and Lausanne, where we plan to double the number of jobs and create a team to focus on pension funds.

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The composition of the Partners’ Committee has changed considerably in recent years; it is no longer solely made up of white, older men. What does this development reflect?

It reflects the extraordinary growth and internationalization of our Group over the last quarter of a century. Among our Partners, who remain in office for an average of 21 years, the youngest is currently 42 and the oldest 54. It’s important that we stay in tune with the outside world and our clients through a diversity of career paths, educational backgrounds, and opinions, a key element that has always been a cornerstone of our Partnership. We can also rely on the experience of our former Partners who still have offices in our headquarters. My cousin Ivan Pictet once reminded me that when he started in the early 1970s, the Bank managed CHF 10 billion and lost 50% of those assets following the first oil shock and the end of the gold exchange standard. Keeping these events in mind helps to put things into perspective when assets under management fall by a few percent.

Has Pictet’s growth been fueled in part by former Credit Suisse clients or staff who have joined you?

We have never targeted the employees of a particular establishment, let alone tried to take advantage of a competitor’s difficulties. Of course, if clients decide to switch, we are open to welcoming them.

The Group is thus moving closer to its clients around the world, resulting in stronger growth outside Switzerland. Is this trend accelerating?

Our roots in Switzerland are still very strong, with around 60% of our 5,500 employees. However, we are seeing more growth abroad, especially as our clients in certain regions prefer local service. Moreover, in our export-oriented industry, the protectionism we see almost everywhere, and which is spreading, is forcing us to move closer to our clients, as serving them from Switzerland is not always possible.

Do you think Switzerland will ever gain access to the European market for financial services?

It seems likely that a framework agreement will be concluded by the end of the year or early in 2025; then the democratic process will begin in Switzerland, which will take time, probably until 2026. However, access to the financial services market is not part of this package, so further discussions will be needed on this specific point.

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What would a failure of this third package of bilateral agreements mean for you?

It would be very damaging for Switzerland and also for the financial sector due to the uncertainty it would create for the economy as a whole. However, I am confident that we will get there as long as the political leaders, supervisory authorities, and umbrella organizations work in partnership with a shared vision. There is clearly room for improvement here. This is all the more important as Switzerland becomes increasingly attractive in the current highly tense geopolitical climate. The country is an island of stability and solidity, where institutions function effectively and it has a strong currency. This reassures many wealthy individuals and even institutions looking to establish themselves in Switzerland for all these reasons.

What impact has the collapse of Credit Suisse had on this perception of stability?

It sent shock waves through Switzerland and beyond the financial sector. Some have compared it to Swissair or other iconic brands of the Swiss economy. However, if we believe in the market economy, businesses are created while others disappear; that’s part of the life cycle of an economy and of a country. I’d like to commend UBS for stepping up to the challenge of acquiring Credit Suisse, as there were many jobs at stake, not to mention the tax revenue that benefits taxpayers.

UBS is currently under pressure: from being seen as a savior, the institution is now perceived as too big and risk-laden. Does this change the conditions for you?

We are fortunate to have UBS in Switzerland, and I would like to see a second institution of this quality. So I don’t think that UBS is a risk for Switzerland. I hope that the authors of the parliamentary report on Credit Suisse will clearly define roles and responsibilities. It could indeed be damaging for the future of the Swiss financial center if this report were to miss the mark by addressing other issues.

Which ones?

It’s crucial to uphold the concept of proportionality. For example, the concept of the “senior manager regime” may make sense for listed companies, as it requires managers to feel more accountable and establishes metrics for their risk appetite. However, it’s not suitable for a group like Pictet, which is owned by seven Managing Partners and, to a lesser extent, by 48 Equity Partners. Our remuneration is tied to our profits, and all our wealth is invested in the Pictet Group. Our clients greatly appreciate the alignment of interests that this represents for them. They also tell us that they like knowing we are here for the long term and that we will not be able to leave with a golden parachute if the ship were to sink.