Banque Heritage CEO: “I’m too young to retire"

Geneva-based Banque Heritage is pursuing ambitious growth plans, including a potential expansion into the external asset management business. CEO Marcos Esteve tells finews.com why the bank wants to strengthen its presence in Zurich, how it plans to compete for relationship managers, and why persistent rumors of a sale are misplaced. His medium-term ambition: CHF 20 billion in assets under management.

Mr. Esteve, why should a wealthy client choose Banque Heritage over one of Switzerland's larger private banks?

We were built by a family, for families. Our shareholders have been entrepreneurs for over 175 years, first as cotton merchants, and later diversified into coffee and more recently into cocoa. Our family group is one of the top 5 players in the 3 commodities.

When they founded the bank, it was because they felt underserved by large institutions. That experience has shaped the bank's philosophy.

At large institutions, clients can easily become just another number. Here, that doesn’t happen. We serve approximately 2,000 clients. I don't know every one of them personally, but I know most of them.

Our objective is to find solutions tailored to individual needs rather than to offer a standardized approach.

A large bank offers scale. We offer attention, and we believe that this is what wealthy families value most.

Does that mean you are deliberately limiting your growth?

Not at all. We want to grow, but in a qualitative and sustainable way. Deepening existing client relationships is just as important as attracting new clients.

Could you be more specific?

We want a strong relationship. We want to understand a client's entire wealth, not just their liquid investment portfolio. That includes business interests, their real estate, and other illiquid assets.

Through our family office services, we can consolidate assets held at Banque Heritage and other financial institutions.

So you also oversee assets held with competing banks?

Yes. We operate a multi-custody model. The first step is to provide transparency across custodians and their costs.

The second is to assess the performance and fees of the different asset managers involved. The third is to evaluate the investment strategy across the client's entire wealth.

That comprehensive view allows us to provide a different level of service.

Who are your typical clients?

We serve wealthy families, entrepreneurs, and traditional private banking clients. Approximately 30 percent of our clients are Swiss, while around 40 percent are other European. We also have clients from Latin America and the Middle East.

Why don't you have a significant presence in Asia?

We operated there in the past, but it is a very brand-driven market. Building a recognized franchise requires substantial financial resources and a long-term commitment.

Isn't that true of any international market?

To some extent, yes. But in Asia, margins can be particularly thin, and clients often have specific financing requirements. For a bank of our size, we need to be selective about where we deploy our resources.

Your headquarters are in Geneva. How important is Zurich to your growth strategy?

Increasingly important. We now have more than 20 professionals in Zurich, primarily in client-facing roles. We intend to grow further, both in Zurich and at our other locations.

But competition for experienced relationship managers is intense.

Absolutely. One of the biggest challenges facing our industry is succession planning. Bankers are getting older, and client relationships remain highly personal.

The question is how to ensure continuity when experienced relationship managers eventually retire.

What is your solution?

We need to recruit young, talented bankers. We interview many candidates and look for people who fit our culture and have the potential to develop.

You are competing with institutions that have much greater resources. What can Banque Heritage offer?

We are agile, we make decisions quickly, and offer an attractive compensation.

Speed of execution is particularly important. Consider the time it takes to open an account for an international client.

How quickly can you do that?

At some institutions, the process can take up to three months. We can generally complete it within a month.

That doesn't mean compromising on compliance. It means organizing processes efficiently and avoiding unnecessary delays.

So you are investing a lot in technology. But can you compete with the major banks?

We will never have the same technology budgets as the largest institutions. Nor do we need to. Our focus is on investing in solutions that support our wealth management business.

What about your banking platform?

We are planning a migration to Lombard Odier’s IT platform in approximately 18 months from now.

Our existing platform has been reliable, but we want technology that better reflects our business model and our commitment to operating in Switzerland.

There have been persistent rumors that Banque Heritage could be sold. Is there any truth to them?

I have worked for Banque Heritage for 20 years, and I have heard these rumors repeatedly.

We are an extremely profitable bank, therefore why would our shareholders want to sell? Where would they find comparable returns? Some of our family shareholders live in Latin America and think in US dollars. Their investment in a Swiss bank also provides currency diversification, not to mention a constant appreciation vs the US dollars.

Because consolidation could offer an attractive exit opportunity?

More importantly, Banque Heritage was established to serve a purpose for the family. Why would they sell it only to build something similar again?

So a sale is not on the agenda?

Selling the bank is not part of our strategy. We want to grow, including through partnerships or combinations with families and businesses that share similar values.

And don’t forget: I’m too young for retirement. (laughing)

Finding suitable partners can’t be so easy.

It is not. The Swiss banking industry has already undergone considerable consolidation. There are fewer potential partners, and not every institution shares our culture or ambitions.

Where do you see opportunities for further expansion?

In the external asset management sector. Consolidation is also underway among independent asset managers, and we believe there is an opportunity to develop a complementary business alongside our banking operations.

Does that mean Banque Heritage intends to enter the independent asset management business?

Yes. We want to build a second pillar for our business.

One pillar would be the bank, while the other would serve the external asset management sector. We see meaningful synergies between the two.

What kind of synergies?

Both businesses can operate through multiple custodians. By combining volumes, we can negotiate better custody conditions and reduce overall costs for clients.

You would effectively be competing with established EAM platforms.

Our objective is to create a model that benefits both independent asset managers and our banking clients.

Some relationship managers prefer the independence of an external asset management structure. Others want to operate within a bank. We want to offer an environment that accommodates both approaches.

How advanced are these plans?

We are actively evaluating opportunities in the market. This is a strategic direction in which we intend to develop our business.

And you are in advanced negotiations with an EAM?

I won’t comment on that.

You have previously stated that you want to double assets under management within five years. How do you intend to achieve that?

Our organic growth model has three components.

First, investment performance should contribute to asset growth. Second, existing relationship managers should expand their client portfolios through new business and a greater share of wallet. Third, we intend to recruit additional bankers.

How much do you expect each component to contribute?

We are targeting approximately five percent annually from each component. Combined, that translates into an annual growth ambition of around 15 percent.

Is that realistic in such a competitive market?

I believe it is. A relationship manager overseeing CHF 100 million should, for example, be able to attract an additional CHF 5 million.

Of course, not every new hire will succeed. That's the reality of our industry, which is why recruitment needs to be an ongoing effort.

Would acquisitions come on top of that organic growth?

Exactly. If we identify suitable opportunities, we will pursue them. Acquisitions would provide additional growth beyond our organic targets.

Where do you want Banque Heritage to be in five years?

At CHF 20 billion in assets under management.