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The soaring Icarus of private banking falls back to earth
01/12/2017 , Freddie Pooter

Boris Collardi, the onetime wunderkind of Swiss private banking who took over as chief executive of Julius Baer at the tender age of only 34, has finally moved on after nine years at the helm at the Bahnhofstrasse bank.

The Ferrari-loving banker jumps in a shock move to Geneva. There he will become a partner at Pictet and probably the leader of the bank’s international private banking operations in due course.  His abrupt departure from Baer clearly came as a surprise to the bank, which hurriedly announced as replacement chief executive the little-known Bernhard Hodler, its deputy CEO and also the chief risk officer.

This is rightly regarded as a “play it safe” appointment.   Word is that “Bernhard Who?” may prove rather a caretaker, as the shaken Baer board takes its time in finding a permanent replacement for Boris, whose abrupt departure must raise questions whether he will get a significant payoff from his old bank.

While Boris now has an important job at Pictet, it is far below what fans of the banker had hoped he could have ultimately achieved after winning his spurs at Baer.  Expectations had been that he could have taken over a top role at his alma mater, Credit Suisse, or win a similar position at UBS.  More recently, word was that he was in line for a leadership position at Lombard Odier.  Indeed, Zurich talk has it that he could have even become a “breakup” king at Credit Suisse, as important shareholders look for better performance from CS.

However, a divorce and rumours of in-house entanglements had clouded the Collardi reputation, in a still Calvinist Switzerland, in the last couple of years. Pictet is a playing-safe move for the banker, where he can expect a useful CHF25 million or so a year.

There’s no denying that the man’s energy and free-wheeling style had transformed Baer to become the largest pure-play private bank in Switzerland, able to hold its head up high besides Credit Suisse and UBS. The current drive by Baer to build presence in the UK regions, helped by what is likely to be more than 20 “team” hires from Barclays Wealth, very much has the Collardi style about it.

Boris, who has worked in Singapore also made Baer a real force in Asia, which the bank came to call its “second home” after Switzerland.

Shareholders as well couldn’t have been disappointed by his tenure. Baer shares are up a quarter to CHF 60 so this year before his departure was disclosed.  Under his reign, the bank has produced a total shareholder return of nearly 90 percent.

And as for client business, Boris’s Baer has doubled AUM to some CHF400 billion – helped by the 2012 deal to buy Merrill Lynch’s international wealth management operations.

Against this, Baer has perhaps had a few torrid moments, including a $500 million penalty for helping American nationals evade business – although a number of Baer rivals have also suffered the same sort of US punishment.  Alleged involvement in unsavoury affairs like the FIFA scandal and the Brazilian Petrobas episode didn’t help.

And some big gaps remain at Baer, critics maintain, including lack of a really sturdy joined-up global IT platform.

Boris had also gained the reputation of not tolerating anybody who could potentially take over his crown at Baer. So Baer chairman Daniel Sauter had little real success in grooming a successor to the Boris hegemony, leaving the bank in the lurch after the resignation bombshell last weekend.

At one stage, a potential chief executive candidate did emerge - Barend Fruithof.  But this former Credit Suisse man fell victim to a Baer reorganisation in 2015.  He recently resurfaced as the head of ASH, a Swiss manufacturer of special-purpose vehicles.

On balance, Boris has been for good for Baer and stockholders – especially in those early years at the bank when he changed the culture from that of a slightly stodgy family-owned bank historically owned by the Baer Jewish banking dynasty into a company with a much more dynamic style.

So while he may have peaked, Boris is and will be very wealthy. He earned more than CHF6 million at Baer last year and a draw of CHF25 million annual at Pictet should be available. Perhaps a problem will be that, for him the Pictet role is just doing more of the same - expanding in Asia, onshore Europe, etc., etc. 

The trouble with these types of supercharged and charismatic executive is that they frequently get bored when things become unexciting, get drawn to other distractions and invariably have such huge talent that they find it tough to be team players. That latter point will be important at a partner-managed house like Pictet.

As for Baer, the sharp drop in its share price immediately after the resignation shows the questions which will be no doubt asked over how it will follow the thrills of the Boris high-wire act, even though he didn’t quite become the greatest show on earth in private banking of recent years.

Perhaps the next Big Top act will be a decision by Baer to give in and accept the loving cuddles of Credit Suisse, as the more well-informed have long expected?

If the shoe fits...

A private banking chum holds that an uncannily accurate pointer to the likelihood that a Third World dictator with kleptomaniac tendencies is on their way out is the size of the shoe collection of their spouses.  We all remember Imelda, wife of the Philippines Ferdi Marcos.  Her collection of footwear frippery hit 1,000 pairs - and out he went.  Similar devotion to footwear was displayed by ‘Gucci Grace’, wife of notorious Zimbabwe dictator Robert ‘e-by-gum’ Mugabe, who has just been dislodged. Unwisely, she has been quoted as saying she is justified spending thousands on her favourite designer shoes, saying: “I have very narrow feet so I only wear Ferragamo.”

So we must keep a close eye on the shoe collection of Mrs Asma, wife of  Syria's Bashar al-Assad and who has a penchant for $5,000 designer shoes.  And why not Mrs Putin and, to trump that, even Melania?

Pip pip

 

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