Discussion with Lionel Aeschlimann: A Talk in Geneva
In the picturesque setting of Lake Geneva, overlooking the majestic Jura mountain chain and the snow-capped Mont Blanc massif, Lionel Aeschlimann, CEO of Mirabaud Asset Management and a managing partner of Mirabaud & Cie, contemplates the changes Brexit has brought to the financial services sector.
Mirabaud, Switzerland's largest listed asset manager, with its London office being the largest outside of Switzerland, housing most of the firm's fund managers, faces significant challenges as Brexit alters market access, necessitates restructuring, and heightens substance requirements in the EU.
Post-Brexit, the UK's departure from the EU Single Market and Customs Union has led to potential obstacles for Swiss banks and asset managers in accessing EU markets and vice versa. However, the Berne Financial Services Agreement (BFSA) between Switzerland and the UK aims to facilitate cross-border financial services, including asset management, potentially helping Swiss banks and asset managers like Mirabaud maintain access to the UK market.
For continued access to the EU market, Swiss entities may need to establish or maintain sufficient substance within the EU. This could involve setting up subsidiaries or branches in EU countries, ensuring compliance with EU regulations like the Alternative Investment Fund Managers Directive (AIFMD). For Mirabaud Asset Management, maintaining sufficient substance may involve ensuring that management functions, risk management, and portfolio management are adequately performed from within the EU if managing EU-domiciled funds under AIFMD.
Brexit has also threatened Mirabaud's Luxembourg-based Ucits investment products, currently sold in the UK by the firm's London-based sales force. If Mirabaud wants to continue selling its products in the UK, it would have to set up UK-domiciled open-ended investment companies (OEICs).
The worst-case scenario for Mirabaud is a complete UK departure from the EU without any treaty, which would mean no market access. Aeschlimann admits that Brexit will cause hassle due to the costs and work involved, but UK clients won't be impacted. However, Brexit could lead to a dismantling of the delegation model, which would be a huge problem for Mirabaud as it currently uses this model.
Despite these challenges, Mirabaud remains committed to the UK market, even though the UK institutional market is competitive and difficult. The event being observed, the Bol d'Or Mirabaud, the largest inland lake sailing regatta in the world, sponsored by Mirabaud for the past 13 years, serves as a testament to this commitment. Aeschlimann believes that it is better for a country to participate in the decision-making of regulations that it will have to apply, even if it only has one vote among many.
Mirabaud's private banking operations in the UK account for €1.7 billion of a global €24.3 billion, and the impact of Brexit on these operations is expected to be limited as most of the bank's London office clients are resident in the UK. Aeschlimann cautions against the hope that shunning membership of a supranational body like the EU will result in a return to the model of a sovereign state as it existed before the Second World War.
[1] Berne Financial Services Agreement (BFSA): [2] Alternative Investment Fund Managers Directive (AIFMD):
- To maintain access to the EU market, Mirabaud Asset Management may need to ensure that it establishes or maintains sufficient substance within the EU, as required by the Alternative Investment Fund Managers Directive (AIFMD).
- The Berne Financial Services Agreement (BFSA) between Switzerland and the UK aims to facilitate cross-border financial services, including asset management, potentially aiding Swiss banks and asset managers like Mirabaud in maintaining access to the UK market.
- In the UK, Mirabaud faces competition in the institutional market, but the firm remains committed to the country, as demonstrated by its sponsorship of the Bol d'Or Mirabaud, the largest inland lake sailing regatta in the world.
- Post-Brexit, Mirabaud Asset Management may need to set up UK-domiciled open-ended investment companies (OEICs) if it wants to continue selling its Ucits investment products in the UK.
