Offshore Private Banking Industry Is Thriving, Say Lehman Brothers

by Amanda Banks, Tax-News.com, London

08 August 2001

According to a report from Reuters news agency, a recent study by Lehman Brothers claims that the offshore private banking industry is going from strength to strength despite attacks over banking secrecy, money-laundering and tax evasion from powerful multilateral organisations such as the OECD and the FATF over the 12 months.

According to the study, offshore private banking assets were relatively untouched when the market crashed last year. It found the growth rate in such assests slowed by a mere 17 per cent since that time. 'Offshore assets have proven to be more resilient to the downturn in capital markets, given their more traditional, older, and more risk-averse client profile,' the report said.

The study's authors contend that there there has been a recent trend for banks choosing to head for offshore financial centres rather than away from them. In particular, Switzerland is a popular destination for banks wishing to target the European region.

Last month, for example, US investment bank Goldman Sachs and Israel's Discount Bank opened new offices in Geneva. And a number of European banks including HSBC Republic, Barclays, Deutsche Bank and BNP Paribas have all recently made Geneva, which is home to around US$1 trillion in private client assets, the European hub of their private banking operations.

Overall, however, the Lehman Brothers study claims that the offshore market, dominated by Swiss-based banks which have 30 per cent of the global market share and 60 per cent of Europe's market share, has continued to grow at a slower pace than its onshore counterpart. The study estimated that offshore markets at present are growing at an 'annualised' 5 per cent compared to last year's growth rate of 6 per cent, and the onshore markets are currently growing at 9 per cent which is down from last year's 12 per cent.

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