Swiss banks look to job cuts to absorb US tax pressure: poll

Swiss banks look to job cuts to absorb US tax pressure: poll

9th January 2014, Comments 0 comments

Swiss banks look set for new job cuts this year, despite ever-rosier figures, amid rising regulatory pressure and a US clampdown on tax-dodgers, consultants EY said Thursday.

In a study on the 2014 outlook for the country's banking sector, EY underlined the tough environment for what is a cornerstone of the Swiss economy.

"Swiss banks have dealt with the challenges of increasingly difficult conditions such as low interest rates, falling transaction volumes and regulatory pressure," said Patrick Schwaller, a managing partner at EY, formerly known as Ernst & Young.

"They have no choice but to adapt their business models and processes on an ongoing basis," he said in a statement.

Three-quarters of banks say that they expect operating profits to improve over the course of the year, EY said.

But the number planning redundancies within the next twelve months nearly doubled to 20 percent, it said.

EY polled 120 banks in December, except for giants UBS and Credit Suisse.

Hit by a US crackdown on tax cheats, EY said that the private banking sector, which caters for the wealthiest clients, was facing the greatest pressure.

"The increasingly unfavourable conditions are currently leading many banks to reassess their business models," said Bruno Patusi, head of wealth and asset management at EY Switzerland.

"The competitive pressure and the tax agreement concluded with the US will tend to accelerate the consolidation," he said.

The crisis has driven the battle against tax-dodging to the top of government agendas, forcing Swiss banks to defend the country's long-held tradition of banking secrecy.

The United States has been at the forefront of the fight, and in August Switzerland struck a deal with Washington over the thorny issue of undeclared money banked by American citizens.

Swiss banks had until December 31 to decide whether to take part in a US come-clean programme that would settle past wrongdoing.

Banks which opt to take part will ward off costly lawsuits but still risk being fined in proportion to the sums involved.

According to the survey, 73 percent of banks believe that the US-driven solution is damaging the sector.

Rather than fearing losses, banks are mainly worried by the cost of employing expensive lawyers to comb through accounts and pass on mounds of data to US tax authorities.

Three-quarters of the banks said that they also expected the automatic exchange of customer information to become the global standard, meaning the final death knell for banking secrecy.

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© 2014 AFP

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