Citigroup on the Migratory Patterns of the Rich
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Switzerland has always been a magnet for the super-wealthy. In the last two years, more families and their wealth have moved to the country. Citigroup’s General Market Manager for Switzerland said who has been coming over and why.
Having worked in several locations in Citigroup’s private banking over the past twenty years, Laurence Mandrile has kept a close eye on the migratory patterns of the world’s rich.
After having lived here previously, her return to the country was well-timed. Mandrile started her role overseeing Citigroup’s Swiss private bank in the summer of 2019, a few months before the pandemic set many of the wealthy and their assets in motion.
Since joining the Geneva office, she has observed an increasing demand for ultra-high net worth families to be serviced from Switzerland for safety reasons, especially post-corona, with its education, health care, and countryside also playing into the nation’s hands.
This new money flows into Citigroup’s Swiss onshore business dedicated to Swiss nationals and residents with a minimum net worth of 25 million francs and family offices from its Geneva and Zurich branches.
Family offices play an important role in Citigroup’s worldwide private banking operations. The bank regularly brings the members of its 1,500-strong family office network together to exchange expertise on topics, such as how to engage with the next generations ahead of the great wealth transfer.
Along with centers in London, Jersey, and Luxembourg, the Swiss booking center falls under Citigroup’s EMEA umbrella, accounting for 20 percent of assets booked in the region.
Although Brexit coming into force at the start of 2020 made it harder for UK citizens to get a Swiss passport, it didn’t stop some of the bank’s super-wealthy clients from heading to the alpine country. This year’s political instability and high inflation on the island have only added to the trend.
The US bank’s Swiss booking center also serves clients in the Middle East, a region Mandrile sees as a big opportunity, given the current price of oil and the energy crisis, all boosting its economic growth.
Clients are attracted to the US bank, not only because its wallet share in the region is growing, but because its Swiss booking center «remains the destination of choice for the Middle East, Mandrile said.
“Mandrile started her role overseeing Citigroup’s Swiss private bank in the summer of 2019, a few months before the pandemic set many of the wealthy and their assets in motion.”
The Swiss booking center is also a draw for Chinese clients, who make up a large part of the wealth coming from Asia over the past two years. Among them are some who have close ties to the United Arab Emirates. These clients might choose to relocate to Dubai or Abu Dhabi, while their wealth is managed from Geneva, she said.
Overall, Switzerland stands out as being particularly business-friendly, which is also partly why US families have continued to come over the past few years, she added.
After COVID, many individuals who had installed themselves or their family offices in Switzerland were ready to invest, but then the war came, keeping clients on the sidelines.
It is only in the past few months that we’ve seen clients come back to trading, Mandrile said.
Reflecting the uncertain and evolving dynamics of the last 12 months, the bank had to shift the way we invest several times, she added while advising clients to remain invested for the core of their wealth and increase the quality of their investments.
During this time, for European investors, the best hedge has been in US dollar, which has shown a 10 percent positive performance just by holding the currency, while safe-haven instruments, like investment grade income, have not worked, she said.
Citigroup is now focused on reviewing clients’ asset allocation while taking a close look at yields, which are making a comeback in fixed income. Moreover, Mandrile has observed certain clients moving to commodities, particularly energy, and illiquid markets.
A recent Citigroup study on the segment showed family offices hold over 35 percent of their invested assets in illiquid markets, via direct investments, real estate, and private equity funds. Within alternative investments, Citigroup has the advantage of being able to offer its clients direct private equity investments in US and global deals.
However, one area the Swiss competition does not need to worry about is the retail sector. The US bank, which prefers «to lead where it can have a competitive edge,» doesn’t have a retail presence in the country, she said.
Questions & Answers
Q.Which specific client groups are now showing increased demand for Citigroup's Swiss services?
Which specific client groups are now showing increased demand for Citigroup's Swiss services?
Ultra-high net worth families and Chinese clients, particularly those with ties to the UAE, are increasingly seeking services from Switzerland. US families have also continued to arrive in recent years.
Q.What minimum net worth is required for individuals to access Citigroup's Swiss onshore business?
What minimum net worth is required for individuals to access Citigroup's Swiss onshore business?
Swiss nationals and residents need a minimum net worth of 25 million francs to be serviced by Citigroup's Swiss onshore business. This applies to both individual clients and family offices.
Q.What is the primary reason for the increased demand for Swiss services from Middle Eastern clients?
What is the primary reason for the increased demand for Swiss services from Middle Eastern clients?
The current high price of oil and the ongoing energy crisis are boosting economic growth in the Middle East. This makes it a significant opportunity for Citigroup's Swiss booking center.
Q.Which sectors are some clients moving into, according to Mandrile, and what percentage of family office assets are held in illiquid markets?
Which sectors are some clients moving into, according to Mandrile, and what percentage of family office assets are held in illiquid markets?
Some clients are moving into commodities, especially energy, and illiquid markets. A Citigroup study showed family offices hold over 35 percent of their invested assets in illiquid markets.