European access concerns Swiss wealth managers

14th January 2016, Comments 0 comments

Swiss private banks and wealth managers are worried about Switzerland’s ongoing issues with the European Union. More specifically, they are concerned about continued access to highly skilled workers and to customers in the EU zone.

Relations between Switzerland and the EU have been troubled ever since a Swiss referendum was passed in 2014 calling on the government to restrict the number of EU workers crossing the border. In addition, Swiss lawmakers are grappling with a tangle of financial regulations that need updating to meet new EU standards.

The Swiss wealth management industry will find it difficult to operate on home turf unless these problems are solved, said bankers at a press conference in Bern on Thursday.

Julius Bär bank chief executive Boris Collardi, representing the Association of Swiss Asset and Wealth Management Banks, said that the industry had already been hit by the Swiss National Bank’s (SNB) decision to end its defence of the franc last January.

Members of the lobby group (which does not include UBS or Credit Suisse) saw CHF1.5 billion ($1.49 billion) wiped off gross income as a result of the SNB’s U-turn. Millions more have been lost as a result of negative interest rates.

Failure to retain regulatory access to EU customers would have “fatal consequences for our sector”, Collardi warned. Unless Switzerland conforms its financial laws to meet new EU standards, Swiss banks would be forced to set up offices in EU countries – a move that could be too costly for smaller players.

The issue has been complicated by the 2014 referendum vote on foreign workers. Besides disrupting Swiss-EU relations, a failure to find a solution to the current impasse could weaken the ability of Swiss banks to operate by denying them access to overseas talent. Some 16% of the private banking workforce currently comes from the EU, Collardi said.

Tax dodgers

The Association of Private Banks in Switzerland (ABPS), which co-hosted the annual press conference, turned its attention to domestic uncertainties. Switzerland has agreed to automatically share tax information with other countries in future, but domestic banking secrecy is still being defended at home.

The so-called Matter initiative will eventually give voters the final say on whether banks also automatically pass on the data of domestic clients to the Swiss tax office.

The Swiss Bankers Association (SBA), which represents domestic retail banking players and the large universal banks, has already come out against the initiative. The SBA is concerned that having one rule for foreign clients and another for domestic customers will prove too complex and costly for its members.

But the ABPS, whose members deal predominantly with offshore assets, has taken a neutral line on the subject. “This is a philosophical question about the relationship between the Swiss people and the state,” ABPS President Yves Mirabaud told swissinfo.ch. “It is for the people to decide, not banks.”

Many private banks will at least be relieved to have settled legal differences with the United States over tax evasion issues. By January 6, some 76 Swiss banks had paid collective fines of more than $1.2 billion to avoid criminal prosecution in the US.

The amount paid out in penalties has struck some observers as being lower than expected. But Mirabaud said the banking sector was merely relieved that “we have something else to talk about”.

“It has been extremely difficult to work out how the size of penalties have been calculated – there has been no transparency from the US,” he told swissinfo.ch. “I think they have been smart enough not to make the amounts so high that banks end up bankrupt and unable to pay.”

One bank which did not survive the US tax evasion probe last year was Hottinger & Cie, established in 1786. The family-owned private bank went into administration in October.


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