banks

Swiss bank trains staff to spot signs of dementia in clients

Julius Baer says industry needs to protect those suffering cognitive decline

Julius Baer, the Swiss private bank, has said all of its customer-facing staff are being trained to recognise signs of early-onset dementia in clients, such as memory loss or repetitive behaviour, in order to better safeguard their health and finances.

It has called for greater awareness of all forms of cognitive decline across the financial services industry, in the wake of news this week that dementia has become the leading cause of death among adults in England and Wales.

“There are increasing concerns about cognitive decline,” said David Durlacher, chief executive of Julius Baer International, London. “The public have the right to expect that we protect and safeguard people with dementia.”

Julius Baer piloted a staff training scheme a year ago, and has now extended it to all its client-facing employees. “It means we can communicate better with our clients who have shown signs of cognitive decline, and get better at spotting issues before they become serious,” Mr Durlacher said.

There are more than 850,000 people with dementia in the UK, with estimates from the WHO suggesting as many as 47.5m are affected globally. In the UK alone, the number is expected to double during the next 30 years, sending associated care costs well above £50bn.

But in spite of this, Europe still lags behind the US in terms of training financial services providers to be alert to signs of cognitive decline.

In the US, the notion of “elder care” is enshrined within the guidelines at many private banks, wealth managers and family offices.

“We issue white papers, educational and training materials and in-person training on this topic,” said Michael Liersch, head of behavioural finance at Merrill Lynch Wealth Management. “We have specific adviser training to highlight red flags of potential cognitive decline.”

Mr Liersch’s comments were echoed by Hugh Magill, chief fiduciary officer at Northern Trust. “It’s part of our basic trust curriculum for all our of trust professionals,” he said.

In the UK, the FCA has issued guidelines on how to deal with what it terms “vulnerable clients”, which covers issues of mental capacity. As yet, however, there is no industry standard on how to deal with customers exhibiting signs of cognitive decline.

Conditions account for up to 11.6% of all deaths in England and Wales

“It’s ad hoc at the moment and becoming dementia friendly is something we are lobbying businesses to do,” said Gavin Terry, policy manager at the Alzheimer’s Society.

Three years ago, the society, with the support of Lloyds Banking Group, published the Dementia Friendly Financial Services Charter — which it is pressing financial services companies to support.

Some private banks and wealth managers are moving to address the issue. Investec Wealth & Investment currently does not offer specific training, but said it was “fully across the issue”.

HSBC has established a three-year partnership with the Alzheimer’s Society and Alzheimer Scotland in a move to ensure that the bank is a “dementia-friendly business”. As part of the programme, under the society’s Dementia Friends initiative, the bank is training branch and call-centre staff, with approximately 2,000 workers having been trained so far.

“People are living much longer, and it’s an issue that is coming far more to the fore,” acknowledged Roddy Buchanan, head of wealth management at WH Ireland. “It’s often terribly difficult. One has to take extreme care to make sure that we’re not doing things that might damage the client from a financial perspective.”

Italy’s Monte Paschi enters crucial weeks for securing rescue

World’s oldest lender has lost 11% of deposits since January, according to its accounts

yesterday

by: Rachel Sanderson in Milan

Italy’s Monte dei Paschi di Siena, widely considered to be Europe’s most distressed bank, will on Monday step up its efforts to secure a last gasp €5bn recapitalisation and securitisation with sweeping implications for the future of Italy’s banking sector.

The bank’s board is set to approve the terms of an offer for retail and institutional investors including Italy’s Generali and US hedge funds to voluntarily swap €5bn of subordinated debt into the equity of a lender with a market value of just €740m.

Chief executive Marco Morelli and advisers JPMorgan and Mediobanca then have just three weeks to nail down a complex rescue package ahead of the December 4 referendum that threatens to unseat reformist prime minister Matteo Renzi.

Their attempt comes against a backdrop of market instability and leakage of deposits after weeks of debate about the viability of the bank, which has already raised €8bn in new capital in the past four years.

Monte Paschi, the world’s oldest lender, has lost €14bn — or 11 per cent — of its deposits since January, with an acceleration in July and August, after it emerged as Europe’s weakest lender in stress tests, the bank revealed in its third quarter accounts last month.

“We are dancing so close to a real disaster,” said one senior banker involved in the transaction.

However, senior bankers close to MPS argued that the deposit leakage was less drastic than would be expected given the torrent of bad news the bank has suffered in recent months.

Bankers said subordinated bondholders would be offered a cash premium to the current market price of their securities in an offer expiring on or about December 2 on the condition that they use the proceeds to invest in the bank’s capital increase.

This could account for €1.5bn of the capital shortfall, they said.

Monte Paschi, which will hold a shareholder vote on the transaction on November 24, also wants to persuade potential anchor investors including Qatar and private equity funds to stump up about €1.5bn towards the bank’s €5bn capital increase.

The remainder of the €5bn will be sought from a rights issue due to take place immediately after the referendum. Insiders describe the rights issue, expected to be priced at around 10 cents, as an initial public offering given it will wipe out existing investors.

Meanwhile, JPMorgan is poised to agree a bridge loan of about €4.7bn to pave the way to a securitisation of €28bn of gross non-performing loans, said bankers. The mezzanine tranche will be subscribed to by Italian backstop fund Atlante and the junior tranche will be distributed to MPS shareholders, with buyers still to be found for the senior notes.

Mr Renzi has favoured a market solution to avoid a vote-losing bail in of the bank hitting retail investors.

But if the voluntary debt-for-equity swap fails, bankers do not rule out a mandatory swap of Monte Paschi’s subordinated debt. With approximately €2bn held by retail investors, this could in turn trigger further deposit outflow by panicked retail investors, said bankers.

Monte Paschi is the largest of eight small and midsized Italian banks in various stages of difficulty. These include Popolare di Vicenza, Veneto Banca, Carige and four small banks bailed in last year.

Finance Minister Pier Carlo Padoan has denied Italy has a systemic problem but calls are growing for the government to consider striking a deal with European regulators following the referendum to enable a sector wide restructuring.

Lorenzo Bini Smaghi, chairman of SocGen and former ECB board member, has argued in Corriere della Sera that to “rely solely on market forces to resolve” the problems of Italy’s lenders meant accepting “an aggressive restructuring” with the risk of a recessionary effect on the economy.

Swiss bank PostFinance introduces charges for retail customer deposits

November 11, 2016

by: Ralph Atkins

Switzerland’s negative interest rates have started to hit retail bank customers, with one of the country’s largest finance houses announcing charges on deposits above SFr 1m.

Swiss banks have so far largely resisted imposing negative rates on ordinary clients for holding cash in accounts, fearing such steps would result in customers withdrawing their money – and instead storing cash at home in safe boxes or under mattresses.

But the move by PostFinance, Switzerland’s fifth biggest bank by balance sheet size which is owned by the Swiss postal service, is the most significant sign yet that resistance may be crumbling.

Wealthier private clients would face a 1 per cent “fee” on cash balances above the SFr 1m threshold from February 1, PostFinance said in a statement on Friday. It also announced hikes in a range of bank fees, including for foreign clients, and slashed further interest rates on savings accounts.

“I appreciate that these measures will not be very popular among our customers,” said Hansruedi Köng, PostFinance’s chief executive. “Nobody likes paying fees.”

The Swiss National Bank cut its official policy interest rate to minus 0.75 per cent at the start of last year in an attempt to prevent a stronger Franc from damaging Swiss exporting companies.

With little prospect of the interest rate environment changing in the near future, “more and more Swiss banks will start to think about how they can mitigate the effects,” said Daniel Kalt, chief economist at UBS in Switzerland. “I would not be surprised if over time we see others following [PostFinance].” Swiss companies already face charges on large bank deposits.

The SNB grants exemptions from negative interest rates on funds parked by banks up to a certain limit, but PostFinance said it had already exceeded its threshold and had paid more than SFr 10m in negative interest this year.

However other Swiss retail banks may be able to resist imposing charges for longer. Banks with large mortgage businesses have been able to compensate for the increased cost of holding retail deposits by increasing margins and volumes on lending for house purchases.

PostFinance has no mortgage business, leaving it to invest clients’ deposits in international financial markets.