Bad Leaver in Private Banking – Meaning & Risks for Private Bankers
The term bad leaver is widely used in Swiss private banking. For many private bankers, it creates doubts when planning a career move. But what does a bad leaver really mean? Why does it matter, and how can you reduce the risks when leaving a private bank?
What Does Bad Leaver Mean?
A bad leaver is an employee who exits a private bank under conditions that the employer considers unfavourable. In such cases, the banker is often restricted from taking clients along. Client relationships are then redistributed internally.
Even though the label can sound severe, a bad leaver status is not the end of a career. With the proper preparation, its consequences can be managed.
Why Is Bad Leaver Status Important for Private Bankers?
The identity of a private banker is built on client trust and reputation. A bad leaver status can complicate transitions to a new firm or affect professional standing in the industry. Yet, the market values performance. Many bankers successfully change positions despite being classified as bad leavers.
Key Contractual Points Every Private Banker Should Review
- Non-compete clauses: They restrict similar roles within a particular area or time. In Switzerland, they are valid only if fairly compensated and limited in scope.
- Non-solicitation clauses: They prevent direct client contact after leaving. Still, if a client approaches you voluntarily, it is usually acceptable. Keep clear records of such cases.
- Confidentiality clauses: Confidential information must remain protected even after you leave a private bank.
Understanding these points is essential. Disputes are rare, since banks wish to avoid reputational risks, but preparation protects you as a private banker.
How to Minimise Bad Leaver Risks
- Plan: Do not resign in a rush. Check your obligations first.
- Communicate correctly: Give proper notice, remain professional, and follow exit procedures.
- Document compliance: Keep evidence that you respected your contract. It is helpful in case of disputes.
- Focus on clients’ needs: If clients ask about your move, explain the benefits for them. Avoid negative remarks about your current private bank.
Independent Wealth Management as an Alternative
Many private bankers leave a private bank to join independent wealth managers. This choice can provide:
- Greater freedom and flexibility
- No obligation to push in-house products
- Broader access to investment opportunities
Despite potential restrictions on leaving, independence often creates more opportunities than limitations.
A Practical Example
Consider a private banker with long-standing client relationships. Before resigning, he reviews his contract and seeks legal advice. He resigns properly, avoids direct solicitation, and starts in a new firm. Clients who value his service contact him on their own. Thanks to his professional approach, he avoids major conflict and reduces bad leaver risks.
Bad Leaver Beyond Private Banking
The bad leaver concept also exists outside private banks. In corporate settings, it usually refers to employees losing rights to shares or bonuses when leaving under adverse circumstances. This shows that the principle is wider, but in private banking, the impact on client relationships makes it especially sensitive.
Conclusion: Bad Leaver Status Is Manageable
The bad leaver status in private banking is serious but not a career-ending event. Preparation, legal knowledge, and professionalism allow private bankers to move successfully to new opportunities. The key is to act ethically, protect client trust, and plan the transition step by step.
Legal Note: Swiss Non-Compete Clauses (Art. 340 CO)
Under Article 340 of the Swiss Code of Obligations (CO), a non-compete clause is only valid if:
- It is agreed in writing.
- The employee had access to clients or business secrets that could cause the employer significant harm if misused.
- It is limited in scope, geography and time (normally no more than three years).
Note: Compensation (“garden leave pay”) is not legally required, but if financial compensation is offered, the clause is more likely to be upheld in Swiss courts.
Swiss Independent Wealth Management Blog
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