BNP Paribas Wealth Management: Financing Solutions for Swiss Clients

This article is a translation of an original interview published in German in NZZ am Sonntag, where Yusuf Savmaz, Head of Switzerland Domestic Market, discusses BNP Paribas’ financing capabilities, including loans over CHF 100 million and property financing.

“We are able to offer financing solutions of over 100 million Swiss francs”

NZZ am Sonntag
10.11.2024

BNP Paribas has roots in Switzerland going back 150 years and plays a leading role in the financing of public and private projects. According to Yusuf Savmaz, Head of Wealth Management for Swiss clients, the area of Lombard Loans and property financing is now also being expanded in this country.

After the turmoil of the past two years, the financing market in particular is seeking to find a new balance. Mr Savmaz, is change afoot in the Swiss banking sector?

Like other banks, we too can benefit from the fact that many clients are looking for new strategic financing partners. As a bank with many years of experience and the balance sheet required to grant large loans, our services are currently in high demand. It is fair to say that there is major change underway in the market for financing available to Wealth Management clients.

You have a facility for your clients to borrow against diversified securities portfolios as well as individual securities. Can you give an example of this?

If business owners need bridging finance for themselves or their company, we have a facility for them to borrow against the enterprise’s shares and take out a corresponding loan. It doesn’t matter whether the shares are listed or not. We have vast experience in corporate banking, which enables us to obtain a precise picture of the opportunities and risks as well as of the valuation of the company in relation to such loan requests. This in turn leads to a higher collateral value for our clients.

For this, the company or the company owner must have a corporate banking relationship with you, right?

That is correct; we always strive for long-term and strategic customer cooperation. If we know our business partners well and can scrutinise their financial situation, then we are in a position to grant loans of CHF 100 million or more, thanks to our size and the strength of our balance sheet. The market need for such loans is greater than ever. We are able to facilitate such transactions because our parent company is extremely well capitalised and the business model is broadly diversified. Moreover we have the expertise of a universal bank with global activities.

How big is BNP Paribas Wealth Management’s business in Switzerland and how much more do you want to grow here?

We only launched our Wealth Management offering targeted at clients based in Switzerland two years ago. We are currently benefiting from demand for financing from many Swiss clients. Here, too, we take a global approach – we do not offer financing on a stand-alone basis. Clients to whom we provide financing are always also BNP Paribas investment clients.

What volume of funds do you currently manage?

BNP Paribas has local operations in more than 60 countries worldwide. With global assets under management of EUR 446 billion as at the end of June 2024, BNP Paribas Wealth Management is the number one private bank in the eurozone. Moreover, within the past two years, assets under management in Switzerland have increased by more than 25 per cent, with strong growth in German-speaking Switzerland in particular.

How long has BNP Paribas had a presence in Switzerland?

BNP Paribas has been operating in Switzerland for more than 150 years. As such, it has been involved as a funding partner in many notable projects in the past, such as the construction of the Gotthard and Simplon tunnels. In Wealth Management, our core competences are the investment business and we also offer a comprehensive range of financing solutions. The property financing sector is a particularly interesting area of strong growth. In combination with BNP Paribas Corporate Banking, we have a very good value proposition and an outstanding position as a universal bank.

Do you only provide financing for property here in Switzerland or also abroad?

We provide mortgage loans both here in Switzerland and abroad. We are doing very well in German-speaking Switzerland – we continue to see rising demand in the Lake Zurich and Zug regions in particular. We have also recently again financed interesting projects at locations in Lugano and Lake Geneva. We can also structure and grant financing for foreign assets from Switzerland, which is an attractive option – and in high demand of late. This is a major advantage for our clientele, as only a few competitors in Switzerland have the relevant expertise. Providing advice and financing from Switzerland, we have recently been able to realise major projects for our clients in London, Berlin and on the French Riviera.

How should you go about financing a house or apartment abroad?

First, we recommend taking out a mortgage in the local currency. Depending on your appetite for risk and interest rate expectations, these mortgages may be either long or medium term. If you are buying a holiday home, for example, you should opt for long-term financing, so you can plan for the fixed costs that arise. In the case of private real estate, we are currently seeing a trend towards short and medium-term mortgages.

What else should you be aware of when buying property abroad?

The tax consequences and succession planning vary greatly from country to country. Inheritance tax in France, for example, is up to 45%. Apart from the issue of financing, detailed planning is highly recommended, so that you have sound advice and are on a solid footing when it comes to income and inheritance tax abroad as well.

Let’s take a look at the Swiss property market: the Swiss National Bank cut interest rates again at the end of September. What does this mean for property financing in Switzerland?

I think that demand for residential property will tend to rise again in the near future. At the moment, an apartment or house can once again be financed more cheaply with a SARON mortgage, which is based on the Swiss Average Rate Overnight. We are currently seeing an inverted interest-rate curve for fixed-rate mortgages. This means that interest rates for short-term loans are somewhat higher than in the long term. Here, too, we always take our clients’ investment business into account. By considering the individual’s or family’s overall situation, we can come up with very attractive and customised offers.

What exactly will happen on the interest rate front?

In Switzerland, we expect further interest rate cuts in mid-December 2024 and March 2025, and anticipate a key rate of between 0.5% and 0.75%. We also expect interest rates to fall in the US and the eurozone due to the trend in inflation.

On that note: what is your assessment of the inflation situation in the near future?

Inflation is falling in Europe and in the US. Despite the conflicts in the Middle East and Ukraine, we expect an inflation rate of 2.2% in the US in the first quarter of 2025. In the eurozone, inflation is likely to fall to 1.8%. In Switzerland, we expect inflation of 0.7% and 0.6% in the first and second quarters of the new year, respectively, which is within the target range set by the Swiss National Bank.