Question Private banking - 7/8 figures, white and safe

[manilobino]

Hi,

I’m looking for a new home for my ETF holdings that have a 7-8 figure worth in EUR - currently it’s with an online broker but it’s not as financially stable as a brick and mortar bank, although has better fees - but I’m willing to pay in fees if it means my funds are secure.

I was thinking to go to Swiss private banking, maybe UBS or the likes, which should have the best possible financial rating in my opinion, and to my recollection entailed a 0.6% or so yearly safekeeping fee.

My first priority - funds safety. Then - low fees. Then - low complexity of opening an account (KYC).

Can anyone recommend a bank for this purpose, in or outside of Switzerland, hopefully with some scientific reasoning (financial rating etc) as to why it’s a good choice?

 

[Gediminas]

Hey,

It's not only Swiss that can give you a sense of safety. Look at Liechtenstein as well. I believe Bendura bank could be a good fit for you.

There are more alternatives than this, that would be cheaper (for example, you wouldn't have to pay a balance fee), but it's a matter of what are your goals.

If you wish, drop me an email., happy to give you some directions.

 

[Martin Everson]

I think I explained already that under EU rules any assets held in a Custody account with a bank are ring fenced and cannot form part of any bankruptcy proceedings. So if you go EU bank route you will be fine.

Switzerland not being in EU has its own protection system. I bank with UBS and won't describe the service as great, I hold bonds with them and having a private banker call you ever so often to tell you why your portfolio is sh1t (despite being up) and trying to sell you some BS product may not appeal to you. Stability wise UBS was bailed out by Swiss government during 2008 financial crisis and Credit Suisse had to take money from Qatar to survive. Swiss banks are not the conservative stable institutions they used to be. So do not even bother with small Swiss banks as their is a lot of consolidation in in industry going on .

I would personal just pick an affordable bank in EU. If you want top quality and ease of opening then BGL BNP Paribas in Luxembourg as you can open online depending on your country. If you want free custody however then Medirect Bank in Malta might be interesting. I once used them. Otherwise battle every day like I do with my Swiss banks and endless KYC form filling even post opening.

 

[Silvio]

Check out the banks on this list, for 7-8 figures most banks in Switzerland, Liechtenstein, Andorra etc will be happy to have you.
https://gsl.org/en/offshore/banks/#show-active-banks
Don't overlook Singapore as well, good way to diversify your holdings, very solid (arguably more than Switzerland) and cheaper too

 

[troubled soul]

I think I explained already that under EU rules any assets held in a Custody account with a bank are ring fenced and cannot form part of any bankruptcy proceedings. So if you go EU bank route you will be fine.

Switzerland not being in EU has its own protection system. I bank with UBS and won't describe the service as great, I hold bonds with them and having a private banker call you ever so often to tell you why your portfolio is sh1t (despite being up) and trying to sell you some BS product may not appeal to you. Stability wise UBS was bailed out by Swiss government during 2008 financial crisis and Credit Suisse had to take money from Qatar to survive. Swiss banks are not the conservative stable institutions they used to be. So do not even bother with small Swiss banks as their is a lot of consolidation in in industry going on .

I would personal just pick an affordable bank in EU. If you want top quality and ease of opening then BGL BNP Paribas in Luxembourg as you can open online depending on your country. If you want free custody however then Medirect Bank in Malta might be interesting. I once used them. Otherwise battle every day like I do with my Swiss banks and endless KYC form filling even post opening.

For non EU resident , What will be the best solution ?

https://www.medirect.com.mt/invest/mutual-fundsOpen only for EU resident and

https://www.bgl.lu/en/individuals.htmlSays call us for Non EU resident.

 

[Martin Everson]

Says call us for Non EU resident.

Yes you need to call them depending on your country. But 7-8 figure deposit/transfer and no funny nationality or country of residence and you should be fine.

For non EU resident , What will be the best solution ?

Depends on nationality and residence. There is not a one size fits all for non-EU residents. Its a risk based approach most banks will adopt for non-EU persons .

 

[rowena]

First of all, it is better to go with GSIB banks. They're too big to fail that's why governments probably protect them in case of any problem: https://www.fsb.org/wp-content/uploads/P111120.pdf

UBS is expensive and not worth it especially if you have the knowledge to manage your money. My UBS private banker regularly calls me and tries to convince me to invest in UBS products but I only hold cash positions with UBS.

Credit Suisse has a much better web/mobile banking system and infrastructure than UBS also a little bit cheaper but UBS is financially more stable than CS.

You can go with a safe broker like IB/Saxo/Swissqoute and invest in safe ETFs like IGLA. This should be safer than keeping cash in a bank.

 

[jjrapy]

What about US banks?

 

[manilobino]

I think I explained already that under EU rules any assets held in a Custody account with a bank are ring fenced and cannot form part of any bankruptcy proceedings. So if you go EU bank route you will be fine.

Thank you!
Can you provide a reference to those EU rules?
I assume that it will be good to stick to a EU bank that has a high enough financial rating, while maintaining low fees.

Switzerland not being in EU has its own protection system. I bank with UBS and won't describe the service as great, I hold bonds with them and having a private banker call you ever so often to tell you why your portfolio is sh1t (despite being up) and trying to sell you some BS product may not appeal to you. Stability wise UBS was bailed out by Swiss government during 2008 financial crisis and Credit Suisse had to take money from Qatar to survive. Swiss banks are not the conservative stable institutions they used to be. So do not even bother with small Swiss banks as their is a lot of consolidation in in industry going on .

Didn’t know that history RE UBS and CS, interesting… so they aren’t as finanvially strong as I thought.

I would personal just pick an affordable bank in EU. If you want top quality and ease of opening then BGL BNP Paribas in Luxembourg as you can open online depending on your country. If you want free custody however then Medirect Bank in Malta might be interesting. I once used them. Otherwise battle every day like I do with my Swiss banks and endless KYC form filling even post opening.

Thanks

 

[manilobino]

First of all, it is better to go with GSIB banks. They're too big to fail that's why governments probably protect them in case of any problem: https://www.fsb.org/wp-content/uploads/P111120.pdf

Thank you for this! This is not a guarantee of protection but interesting nonetheless.

This list of top 50 safest banks worldwide is definitely relevant.

UBS is expensive and not worth it especially if you have the knowledge to manage your money. My UBS private banker regularly calls me and tries to convince me to invest in UBS products but I only hold cash positions with UBS.

Credit Suisse has a much better web/mobile banking system and infrastructure than UBS also a little bit cheaper but UBS is financially more stable than CS.

You can go with a safe broker like IB/Saxo/Swissqoute and invest in safe ETFs like IGLA. This should be safer than keeping cash in a bank.

IB has BBB- credit rating last I checked which is pretty bad, that’s why I prefer a brick and mortar bank at this point.

 

[manilobino]

What about US banks?

I’m EU based and rather keep my funds in the same region.

 

[rowena]

IB has BBB- credit rating last I checked which is pretty bad, that’s why I prefer a brick and mortar bank at this point.

If you buy ETF via IB then it will be held with a custodian bank. It means in case of any problem like bankruptcy, your assets should remain safe. The same applies to brick and mortar banks. For ex: if you buy ETF with UBS, it doesn't mean your assets will hold with UBS.

Yes they don't have a good credit rating(BBB+). I like IB because they're a publicly traded company and that's why they regulated better and they have to comply with more strict rules. IB also offers insurance to accounts up to $30M and the insurance company is Lloyd's Bank.

 

[Golden Fleece]

What about US banks?

 

[Golden Fleece]

Stability wise UBS was bailed out by Swiss government during 2008 financial crisis and Credit Suisse had to take money from Qatar to survive. Swiss banks are not the conservative stable institutions they used to be. So do not even bother with small Swiss banks as their is a lot of consolidation in in industry going on .

I agree with the first part of this statement. I would not trust UBS or Credit Suisse any more than I trust the big American or European banks. In fact, if you examine banking history you will discover that UBS and Credit Suisse were widely responsible for the destruction of privacy in the Swiss banking system through their incompetence and by acting like other too big to fail Western banks.

I disagree with not using smaller Swiss banks, although Martin may know more than I do. If I was the OP, I would target small to medium sized banks in Switzerland and Liechtenstein (because of the long culture of privacy in those countries), but carefully compare the financial statements for each bank. Then select a few superstars. Doing a financial analysis of a bank is much simpler than it sounds and it often relies on just a handful of ratios. Simon Black has written extensively on this topic if you Google the topic.

https://www.sovereignman.com/intern...-to-tell-if-your-bank-is-actually-safe-24978/

 

[troubled soul]

If you buy ETF via IB then it will be held with a custodian bank. It means in case of any problem like bankruptcy, your assets should remain safe. The same applies to brick and mortar banks. For ex: if you buy ETF with UBS, it doesn't mean your assets will hold with UBS.

Yes they don't have a good credit rating(BBB+). I like IB because they're a publicly traded company and that's why they regulated better and they have to comply with more strict rules. IB also offers insurance to accounts up to $30M and the insurance company is Lloyd's Bank.

Very true,
Even some liquid and Overnight ETF are also there .
It is best practice for protect your Assets from any bad things

 

[manilobino]

If you buy ETF via IB then it will be held with a custodian bank. It means in case of any problem like bankruptcy, your assets should remain safe. The same applies to brick and mortar banks. For ex: if you buy ETF with UBS, it doesn't mean your assets will hold with UBS.

Then the real question should be - which custodian bank does IB use, and what is its financial rating?

Yes they don't have a good credit rating(BBB+). I like IB because they're a publicly traded company and that's why they regulated better and they have to comply with more strict rules. IB also offers insurance to accounts up to $30M and the insurance company is Lloyd's Bank.

 

[troubled soul]

Then the real question should be - which custodian bank does IB use, and what is its financial rating?

https://www.interactivebrokers.com/en/index.php?f=3176

 

[manilobino]

https://www.interactivebrokers.com/en/index.php?f=3176

This is valid for institutional investor,
I’m an individual investor. I read somewhere that for individual investors IB acts as the depositor/custodian which means the risk stays with IB.

 

[manilobino]

I think I explained already that under EU rules any assets held in a Custody account with a bank are ring fenced and cannot form part of any bankruptcy proceedings. So if you go EU bank route you will be fine.

So the bank credit rating does not matter at all - but only that of the depository/custodian bank that the bank uses?

i.e. would you be just as comfortable investing via two banks, one BBB and the other AA, as long as both use e.g. Citibank Europe as the custodian bank?

Also, I wonder - what would stop a bank from promising to use one custodian just to attract a big investment, and then use another which is cheaper for the bank. I assume that it’s less likely to happen with a higher rated bank vs. a lower rated one.

I would personal just pick an affordable bank in EU. If you want top quality and ease of opening then BGL BNP Paribas in Luxembourg as you can open online depending on your country. If you want free custody however then Medirect Bank in Malta might be interesting. I once used them. Otherwise battle every day like I do with my Swiss banks and endless KYC form filling even post opening.

I definitely don’t want periodic KYC seeings as this is a norm with Swiss bank according to you and others in this thread, I’m fine without the Swiss banking option.

About BGL BNP Paribas - can hou elaborate a bit on what you mean by top quality in their case? (Aside the high rating)

And a generic question - would you be comfortable investing an entire sum with one bank or do you recommend spreading to different accounts? (if spreading, makes sense to check and verify that the different banks use different custodians)

 

[Martin Everson]

Can you provide a reference to those EU rules?

I discussed it here 3 years ago. You can examine the Bank Recovery and Resolution Directive 2014/59/EU. See Article 44(2)(c).

(c)

any liability that arises by virtue of the holding by the institution or entity referred to in point (b), (c) or (d) of Article 1(1) of this Directive of client assets or client money including client assets or client money held on behalf of UCITS as defined in Article 1(2) of Directive 2009/65/EC or of AIFs as defined in point (a) of Article 4(1) of Directive 2011/61/EU of the European Parliament and of the Council (31), provided that such a client is protected under the applicable insolvency law;

I assume that it will be good to stick to a EU bank that has a high enough financial rating, while maintaining low fees.

Yes that is pretty much it.

So the bank credit rating does not matter at all - but only that of the depository/custodian bank that the bank uses?

Whether it falls under EU BRRD is what matters. Lehman Brothers was 'A' rated days before it collapsed so not 100% sold on credit ratings....lol.

About BGL BNP Paribas - can hou elaborate a bit on what you mean by top quality in their case? (Aside the high rating)

Good service.

And a generic question - would you be comfortable investing an entire sum with one bank or do you recommend spreading to different accounts? (if spreading, makes sense to check and verify that the different banks use different custodians)

As you may not know I hold a ton of accounts between banks and EMI's. I think that answers the question.