Meet the Swiss banker handling the exit bonanzas of Israel’s tech elite

Solly Alain Lawi, one of the owners of Geneva's Hyposwiss Private Bank and a member of its management, believes contrary to many that tech shares are currently not overpriced. It is worth taking note of his expert opinion not just because of his decades of experience in investing, but also due to Lawi being the man many of Israel's tech entrepreneurs turn to when they are looking for financial advice. Hyposwiss has become over recent years a foreign banking home for many of Israel's nouveau riche who made their fortune from tech exits.

"The markets went down a lot in March. We held all our positions. We didn't sell. We should have sold in January-February, but we didn't sell and then throughout the crisis we held our positions and then the market came back," Lawi told CTech last week. "You get a lot of calls from clients after the crisis saying the market is overpriced and we told them three things: the fact that the governments and central banks came and said ‘we will support the economy,’ put a floor on the market. This was a really strong message because they showed they would be here to uphold the economy. The second thing was that interest rates went down to zero. So you can't really invest in bonds because yields are more or less at zero. The third thing is that you have to distinguish between different stocks. The market went up in general, but if you go stock by stock a lot of them are still down 40%. The banks, for example, are down 30-40% this year. What went up is the tech sector. But this is normal because Amazon or Zoom are much stronger now than they were in January. You had an acceleration of history in the past nine months. All of the sudden, digitization and online shopping are much stronger than a year ago. These stocks are expensive, but I don't think they are at a level that they will crash because there is a reason behind these companies' high valuation."

More than 70% of Hyposwiss is owned by the Lawi family since the 2014 merger with their Mirelis InvesTrust bank. Hyposwiss acquired Israel Discount Bank's operations in Switzerland in 2015 for $11 million. In 2019, it also received Bank Hapoalim's clients in Switzerland and Luxembourg, being paid to do so by the Israeli bank due to the risky nature of the interaction. In addition, it has also been adding its own Israeli clients throughout the years, resulting in more than 25% of its clients currently being Israeli, adding up to an estimated 1,000 individuals, or more.

"When you have a certain wealth, especially in non-western countries, you are asking yourself where you should put your money. If you want to have it outside of Israel, for example, Switzerland is a very good country in that sense," explained Lawi. "It is a solid country that has a very good reputation and a tradition of 300 years of private banking. So if you are an Israeli who wants to have assets outside Israel I think Switzerland is more or less your first choice.

"Today you see that there is a very big fear factor. Big banks are becoming very heavy and rigid in the way they handle business because everybody at every level of the hierarchy is afraid to be caught doing something wrong with the regulation being so strong," added Lawi. "In our bank because we are the board, the management and also take care of the clients, we understand the business and I would say that the fear factor is lower. At a big bank in Israel everything is suspicious. But not all our clients are suspicious and we usually don't suspect our clients of doing anything wrong. It is just the atmosphere which is like that and not the reality. We know our clients very well and provide a very personal service. Clients can identify who owns the bank and who they are talking to and this level of closeness is very important."

Lawi said he especially enjoys serving tech entrepreneurs. "The tech entrepreneur for us is an interesting sector for private banking because these are people who only became rich in the last 20 years or so. Usually they are so preoccupied in their own work and world that some of them don't know much about the financial markets. So they want to be educated. I like to meet prospective clients from the tech sector, it is a nice challenge because they are very smart and you can provide them with knowhow they usually don't have. You grow with them and they learn through me and I learn through them and this is a very interesting sector to work with," explained Lawi.

Despite the Covid-19 pandemic, Lawi revealed 2020 has been a very good year for Hyposwiss, with the bank growing in terms of new clients, as well as having existing clients putting more money in their accounts.

Lawi admitted he had doubts regarding how the 2008 crisis would affect their business, but said it ultimately ended up benefitting private banks like Hyposwiss.

"In 2008 I was shocked. I said to myself 'how will we acquire clients?' I was always sure Switzerland would survive. As long as you have creation of wealth Switzerland will be very strong in the bank sector. But I was asking ‘how will we be able to attract clients because we don't have a marketing engine like UBS and Credit Suisse’. But what we saw with the crisis is that clients saw that in a boutique family service office they could relate with the people and know we would always be there for them," noted Lawi. "Today I have a competitive advantage compared to 20 years ago when I was just a small guy. Now if you have a family bank people trust it more. In 2008, the Swiss government had to save UBS, but we didn't need to be saved and that makes people feel safe in the relationships they have with us."