Could negative interest rates bring some banks to their knees?

Of course, negative interest rates are having an effect. However, many banks are clearly still holding back from passing these on to their clients. Many banking houses say this but they don’t practice it, as they’re worried about losing clients. And as long as the competition doesn’t do it, we see no reason to press ahead with it.

Negative interest rates have already led to some banks having a lot of cash on hand.

That’s why in this year alone we’ve paid out a total of 35 million francs in negative interest on euro- and Swiss-franc-denominated assets. Lots of clients are holding on to their cash accounts because they can’t see any safer investment possibilities.

«I think that Facebook’s cryptocurrency, Libra, is an interesting project and one that could be a real success»

Fixed-income investments don’t offer much yield, equities show very high valuations and the global geopolitical chaos is unsettling. Real estate is still an option, though.

How are hedge funds and gold looking?

We’ve increased our allocation to hedge funds to 7 percent in our portfolios, as, in recent years, this asset class wasn’t particularly well-regarded by investors.

Gold is a recurrent key component of our investment strategy. That was the case in the 1970s as well as during the 2008/9 financial crisis. At the moment, we’re upping our gold allocation, as we’ve got less and less trust in currencies.

Are cryptocurrencies the alternative investment of the future?

Our clients have expressed little interest in cryptocurrencies. In contrast, however, I think that Facebook’s cryptocurrency, Libra, is an interesting project and one that could be a real success.

«If you work hard, you can still earn decent money»

In comparison with bitcoin, Libra will be more stable as there’s an oversight committee and Facebook users offer a massive potential client base for this virtual currency.

In contrast, in the near future, I see an «e-renminbi» controlled by the Chinese. That could mean that sooner or later – perhaps in twenty years – the U.S. dollar will be replaced. We have developed specific know-how on the compliance side in order to handle all requests crypto-related, although that said, we’re not offering any crypto products.

What keeps you motivated to stay in banking?

If we’re being honest, banking is still a «good» business. If you work hard, you can still earn decent money. Margins have been massively slimmed down, but, in comparison with other industries, they’re still comfortable, and the global level of available assets continues to grow unchecked.

You’re 59 years old. Have you already appointed your successors at the bank?

Not yet but involving the next generation keeps me busy! My nephew (my brother’s elder son) decided to join the bank in May 2018 after practicing internal medicine and oncology for 7 years. He’s currently working on the private equity side and he’ll soon be heading to Hong Kong for one or two years to gain experience.

«When they reach 30, I hope they’ll join UBP.»

My elder son, who’s 28, worked for a large consultancy firm and now wants to found a start-up in the U.K. that offers the chance to invest with small amounts of cash. My younger son, who is 26, recently left a well-known U.K. fintech and will be starting with a Zug-based private equity firm at the beginning of 2020. When they reach 30, I hope they’ll join UBP.

Guy de Picciotto, 59, is the CEO of Union Bancaire Privée (UBP). After completing his studies at Webster University, he worked as a management consultant for three years. From 1986 to 1988, he completed a banking education at various institutions such as UBS, Morgan Stanley, Bear Stearns, and Sanyo Securities. In 1988, he joined the Compagnie de Banque et d'Investissements (CBI), founded by his father Edgar de Picciotto in 1969 and later renamed Union Bancaire Privée.

Michael «Mike» Blake, 44, has been responsible for UBP's Asian business in Singapore for almost four years. Prior to that, he worked for Coutts International for five years, first as general manager for the Asian region in Hong Kong, then as CEO of Coutts International until the long-established institution was integrated into UBP. Blake started his career at UBS in Hong Kong, as head of the Asia-Pacific region.