Banking and financial services thrive after profound transformation
Compliance with rigorous international regulations and the strengthening of fiscal requirements makes Switzerland’s tax haven tag totally outdated
Once shrouded in secrecy, Switzerland’s banking and financial services industry now boasts total transparency while still retaining its global edge, acquired thanks to its unmatched experience and knowledge, modern and efficient systems, and adherence to strict international regulations. Not only is the country implementing the most rigorous tax legislation like the US Foreign Account Tax Compliance Act (FATCA), which requires financial institutions and certain other non-financial foreign entities to disclose the assets held by their US account holders, but Swiss banks have also invested approximately $500 million to date in the latest equipment, systems and processes to comply with the information exchange. And yet, despite the industry’s profound transformation and resilience in the years after the global financial crisis, misperceptions still linger about Swiss bankers, nourished by Hollywood movies. Industry officials smile and shrug at these outdated clichés and focus rather on the industry’s strengths: excellence of service and bespoke wealth management provision. With more than a quarter of all global cross-border assets managed in the country, around $2.3 trillion, Switzerland is the undisputed world leader in wealth management. What is more, the confederation is also one of the most prominent international asset management hubs, with a large portion of the invested global fund management invested locally.
Wealth management magnet
Around 250 banks operate in Switzerland, including major domestic and foreign financial institutions — such as local multinational giant UBS Group and Credit Suisse. Some 90% of those banks recorded a profit in 2017. The banking sector directly and indirectly employs 308,000 people and generates $13.8 billion in taxes, which is more than federal spending on transportation, agriculture and food. “Switzerland is a leading and stable international financial center with a long tradition,” says Herbert Scheidt, chairman of the Swiss Bankers Association (SBA). “Highly innovative and experienced, we provide a unique range, depth and outstanding quality in all fields of finance. We are oriented towards providing first class services to our clients globally. “Today, Swiss banks are transparent. The automatic exchange of information has been fully implemented by all banks. We saw in 2018 the first wave of exchanging data with 40 countries, the second wave in 2019 will include 80 countries, and more waves will follow.” Scheidt is eager to expand on this point and highlights the impressive progress Switzerland’s banks and financial institutions have achieved in embracing rigorous international legislation to boost transparency. One of the Swiss banking sector’s key attractions for foreign individuals and businesses is its exceptional ability to handle multi-currency accounts in a fast, accurate and highly-efficient fashion. “Switzerland is a highly innovative place and constantly reinventing itself,” says SYZ Group CEO Eric Syz: “Portfolio management in any currency may seem trivial but it is one of many value propositions that Swiss banks can offer.”
Swiss global financial exchange embraces latest fintech developments
The Swiss stock exchange (SIX) enjoyed a stellar 2018, recording the highest number of initial public offerings in 17 years
Providing the stable and trusted state-of-the-art backbone that enables the Swiss banking and financial services sector to thrive, SIX is a key driver in the transformation of fast-moving financial markets. As the operator and developer of infrastructure services in the areas of securities, payment transactions and financial information, SIX is an engine for efficiency, quality and innovative capacity across the entire value chain of the Swiss financial center. The exchange is the fourth leading exchange in Europe and acts as host to the famous Swiss Market Index (SMI), which just celebrated its 30th anniversary. Owned by its users — approximately 130 banks — and with 2,900 employees and a presence in 23 countries, SIX recently introduced the world’s first automated digital trading platform. With a reputation for a high level of innovation, ingenuity and excellent international network, SIX is spearheading innovation in the digital space and is a key player in the financial technology (fintech) industry. SIX operates the multi-currency repo trading platform, with the system used by more than 160 domestic and international clients ranging from regional and international banks to Swiss insurance firms and the Swiss National Bank.
Fast and fluid data platforms
“SIX is a financial market infrastructure organization and service provider,” explains CEO Jos Dijsselhof. “We are not a financial institution but provide services to financial institutions. “Within the portfolio of activities we have, we also run the exchange. The SMI represents well above 85% of the Swiss market and is the leading indicator in Switzerland.” Dijsselhof reveals SIX has created a venture capital fund to invest in fintech. “Next to helping really small companies with incubators and accelerators, we also have the opportunity to invest in firms, get close to them, and potentially use their services within SIX and benefit from fintech technologies,” he adds. “We have the idea of creating a digital exchange, which involves bringing assets and money into the digital world (tokenization), and then blockchain-based technologies, where you do an instantaneous transaction. This instant change of ownership removes risk. We make the whole capital market more efficient.”
Banking titan UBS is a beacon for billionaires and the world’s wealthy
Considered one of the biggest and most powerful financial institutions in the world, UBS’s capital strength, security protocols and reputation for discretion is unparalleled
A banking giant and national icon, UBS Group is one of the world’s most powerful and successful financial institutions with operations ranging from private and investment banking to wealth and asset management. Regarded as a symbol of the Swiss banking resilience and turnaround, a decade after the global economic crisis UBS is going the extra mile in terms of regulations and capitalization. With an extensive presence in the US — where the group employs around 20,000 people — UBS is a formidable player that is proud of its reputation as a highly successful wealth management provider. In recent years, the bank has totally transformed to adhere to the new industry landscape and comply with new regulations. “Regulatory reform was necessary following the financial crisis and to restore confidence in the financial system,” comments Axel Weber, UBS chairman. “Financial stability has improved substantially. Large Swiss banks are now among the world’s soundest and best capitalized. We adjusted our business model early on to respond to the changed regulatory environment and we continue to proactively manage regulatory change. In 2011, we changed our business model to focus on the core of what UBS is good at, namely its global wealth management and its position as leading universal bank in Switzerland. Our transformation happened fast, early and it happened very decidedly. We are now in a position where we can try to leverage that early success and gain more traction with our growth initiatives in the future.” According to Weber, international clients are eager to make the most of Switzerland’s key competitive advantages, such as its stable political environment, strong economy and currency. “UBS is the only truly global wealth manager with expertise and access to the world’s fastest growing markets,” Weber adds. “And we are the market leader for ultra-high net worth clients with complex needs reaching across borders. We see great potential for growth here, largely because wealthy clients value our skills in caring for both their family and their business. UBS has a strong capital position and a cash-flow heavy, diversified and successful business model.”
Switzerland proudly tops the pile for protecting wealth
The preservation and protection of prosperity has seen the wealth management industry in Switzerland set the industry benchmark and attract billions of dollars
With wealth and assets management now firmly at the core of Switzerland’s expanding banking and financial services sector, industry players are taking advantage of the boom period. Given its award-winning chairman Fritz Kaiser once co-owned and chaired Swiss Formula One team Red Bull Sauber PETRONAS, it is no surprise that his wealth management firm, Kaiser Partner, is racing ahead of rivals. Headquartered in neighboring Liechtenstein, which also boasts a transparent regulatory environment, the company develops tailor-made strategies and solutions to protect and grow wealth. One of Kaiser Partner’s main mandates is to help wealthy individuals and families from the US, or with ties to the US, safeguard their assets in Switzerland. “We take care of clients from 20 countries and as a group of companies we look after some $30 billion in private wealth as trustees, administrators or asset managers,” states Kaiser. “We stand out as we see the big picture and want to offer value with bespoke solutions — via the Kaiser Partner Wealth Table — rather than just sell products. “Switzerland and Liechtenstein are attractive, secure countries that can serve as international investment hubs for wealthy families from the US and elsewhere,” he says.