Wealthy U.S. individuals have already pulled most of their money from Swiss private banks and could exit altogether as a global clampdown on tax evasion and banking secrecy benefits onshore rivals, a report showed.
Boston Consulting Group (BCG) data showed U.S. clients have withdrawn almost completely from Swiss banks since 2006, particularly since an extended tax dispute between U.S. authorities and UBS , Switzerland's largest bank.
North American assets held in Swiss private banks fell to just 2 percent of the total in 2010 from 18 percent just four years earlier, the BGC report showed on Tuesday.
While the U.S. is the largest single country in terms of wealth, it is fairly irrelevant for offshore business in Switzerland and other offshore centers, said Zurich-based BCG partner Peter Damisch.
BGC's Global Wealth 2011 report said Swiss offshore bank assets under management were almost flat in 2010, while the assets of European onshore rivals swelled 6.2 percent and U.S. private bank assets climbed some 8 percent.
While much of the discrepancy was explained by the strength of the Swiss franc, which reduced the local currency value of dollar and euro-denominated assets held in Switzerland, U.S. and European clients also made net withdrawals from Swiss banks, offsetting a large part of emerging market inflows.
We would expect the business of U.S. clients in Switzerland (private banks) will really erode and almost disappear over the next couple of years, said Damisch.
Swiss private bank revenues and margins also came under pressure as client risk aversion and new restrictions on the advice given to western European clients, holding 59 percent of total assets, dampened client activity.
Switzerland, which has the second highest proportion of millionaire households in the world, is expected to remain one of the world's biggest wealth management centers, although regulatory developments in developed markets are helping shift the focus to the onshore management of assets from offshore.
(Reporting by Martin de Sa'Pinto and Joe Giannone; Editing by David Holmes)