ZURICH (Reuters) - UBS UBSN.VX will spend more than 100 million Swiss francs ($105.42 million) on a facelift of its Zurich headquarters, hoping to turn the building into a buzzing retail area on one of Europe’s most exclusive shopping streets.
The Swiss bank is splashing out as other European banks are tightening their belts on real estate, as they cut bloated balance sheets, slash jobs and reconsider the cost of occupying prime locations amid a downturn in business.
On Zurich’s Bahnhofstrasse, rental space commands roughly 9,000 Swiss francs ($9,500) per square meter, according to estimates compiled by real estate firm Wuest & Partner, making it among Europe’s most expensive property.
Many Swiss private banks, which have offices in the area, see that as money well spent as they target the same clientele shopping at luxury vendors such as Gucci and Prada which fill Bahnhofstrasse.
Zurich architects EM2N have been commissioned to gut UBS’s stone-pillared headquarters, built in 1916, and adapt the buildings immediately surrounding it for rent as shops and cafes, in a project expected to last more than two years.
The grand entrance at No. 45 Bahnhofstrasse, where tellers serve clients in a marble-lined hall, is listed so will only undergo a minimal revamp when work begins in 2015.
“We are setting an attractive urban accent in the middle of Zurich and we see this as a further commitment to our home market,” UBS’s operating chief Ulrich Koerner said in a statement.
UBS is at pains to play up its Swiss roots after abandoning riskier parts of its investment bank, which has produced a series of scandals including a $1.5 billion penalty for manipulating Libor and other benchmark interest rates.
During the renovation, roughly 650 UBS bankers including Chief Executive Sergio Ermotti will move from the Bahnhofstrasse site, between luxury boutiques Chanel and Cartier, to other office space the Swiss bank owns nearby.
Industry heavyweights UBS, Credit Suisse CSGN.VX and Julius Baer BAER.VX dominate Bahnhofstrasse.
Swiss private bank Clariden Leu, with roots back to 1755, has been the highest profile bank to disappear from Bahnhofstrasse, after the brand disappeared when the bank was integrated into Credit Suisse, its parent.
Many employees at UBS headquarters will be moved into Europaallee, a new development near Zurich’s train station which seeks to revitalize the city’s seedier area with bars, shops and office space. ($1 = 0.9486 Swiss francs)
Reporting By Katharina Bart; Editing by David Cowell and Alexander Smith