Goldman Sachs Expands Into Switzerland

by Carla Johnson, Investors Offshore.com

02 July 2001

Goldman Sachs, the respected investment bank, announced recently that it has opened a new office in Geneva, in order to target ultra wealthy individuals. The move will lessen the organisation's dependence on the volatile investment banking business, as Sylvain Hefes, global head of Golman's European wealth management explains: 'There is an overall recognition by the industry that volatility in investment banking has to be counterbalanced by asset management and private banking. We would expect that the (private asset management and private banking) management division would contribute to a much larger part of our business as a whole,' he told journalists at a press briefing.

Goldman Sachs' move is brave, but not foolhardy by any means. Although some firms are scaling back their private banking operations in order to try and cut costs, Goldman believes that it can capitalise on the good name it has earned within the investment banking business to entice wealthy clients. The new venture is targeting the very top tier of clients, and is only interested in those with more than $25 million in liquid net worth.

However, this may be a smart move, as although Geneva (which is estimated to hold a third of the international wealth held offshore) is somewhat overbanked, recent surveys have suggested that the number of people with between $25 million and $1 billion to invest is likely to increase by seventy to eighty percent in the next three years. Should this come to pass, Goldman Sachs will be in exactly the right position to benefit from it.

Hefes believes that the project will be a success, and that the company will be able to capitalise on its brand sufficiently to break even within 18 to 24 months. 'There will be a lot of referral business and word of mouth leading to growth which is measured and paced,' he predicted.

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