For world’s wealthy, years after financial crisis cash is still king

The world’s richest people are clinging to stockpiles of zero-yielding cash despite a surge in financial markets and increasingly sophisticated attempts by private banks to entice them into investing.

Private banks have had to repair trust following the financial crisis of 2008-09, which sent their wealthy clients scurrying for cover and taking on ever larger positions of cash.

Nearly six years on, wealthy investors have a preference for cash rather than risk big bets on stock and bond markets.

“The cosy and safe world we thought to live in before the financial crisis not just from a financial point of view but also from a geopolitical point of view has proven to be not that cosy and safe,” Georg Schubiger, the head of private banking at Swiss bank Vontobel, said at the Reuters Global Wealth Management Summit on Tuesday.

Cyprus’s seizing of deposits above 100,000 euros (HK$1.05 million) last year and political tensions between Russia and Ukraine are two of the major factors keeping wealthy clients from putting their money into play.

The super-wealthy retained huge stockpiles of zero-yielding cash throughout the recent surge in financial asset prices, including a roughly 30 per cent rise in the MSCI all-country index over the past 18 months.