Since the global financial and economic crisis erupted more than two years ago, the Swiss financial centre has been under substantial pressure. Keywords such as rescue package, grey list, bank secrecy, and tax war with the USA were dominating the headlines in the domestic and foreign press. Particularly in the past twelve months, the financial centre has come under considerable fire. However, the public criticism is exaggerated, and the pessimists are overlooking one important detail: In an international comparison, Switzerland has coped with the crisis very well. With one notable exception, Swiss banks were not significantly affected by the global financial crisis; many even emerge from it invigorated. Beyond our country’s borders, the picture is considerably gloomier.
In the USA alone, upwards of one hundred banks had to file for bankruptcy since the outbreak of the crisis. The survival of numerous European banks continues to depend on ever-increasing government funds. In contrast, the largest Swiss bank is back on its own feet again, and its rescue has not cost the taxpayer a single penny; instead, it has washed up billions into the treasury. As a result of the financial crisis, numerous countries had to assume record-high new debt while the Swiss national finances are healthy. The expected low debt/GDP ratio of 46 per cent and the significant stability of the banking centre will contribute considerably to the competitiveness of the Swiss financial centre.
Further, the Swiss financial centre possesses key competencies not to be found in any other global financial centre. Swiss Banking embodies traditional Swiss values such as political, social and economic stability, internationalism, innovation and high service quality.
The Swiss financial centre is a cluster that distinguishes itself by unique know-how in all facets of banking, from property management to investment banking and from asset management to private equity. While contributing twelve per cent to the country’s creation of value, the financial centre is a growth and innovation engine for the entire Swiss economy. Moreover,
it provides attractive jobs to nearly 200,000 people.
In order to fully capitalize on those strengths, the Swiss financial centre has been developing a forward strategy in recent months with an aim to strengthen the economically ever so important finance sector sustainably. This is not about reinventing the wheel, but rather creating ideal and target-oriented structural conditions. Besides preserving traditional values like stability and legal security, the structural conditions for the financial centre must be continually adapted to enhance its appeal, for example, by eliminating stamp duties or in the field of collective investments.
Our human capital being one of our biggest trumps in an international comparison, education is a further focus of our attention.
In the field of transnational asset management, in which Switzerland has adopted the international standard of fiscal cooperation by complying with the OECD rules, the Bankers Association has also developed a new strategy that makes it possible to answer the concerns of both the foreign tax laws and the Swiss financial centre. This strategy, which is supported by the Swiss authorities, will be negotiated bilaterally and meet the following conditions. First of all, the privacy of bank clients must continue to be safeguarded, for trust and respect between citizens and the state are an essential component of our understanding of the state. Both the actors of the finance centre and the general public firmly oppose an automatic information exchange. Secondly, existing accounts must be brought in line with foreign revenue boards without compulsory repatriation. We must offer clients the possibility to build a bridge towards fiscal legality.
In this sense, Switzerland is willing, thirdly, to ensure a better taxation of foreign capital and its gains. This is to be achieved by introducing a flat-rate withholding tax.
Foreign states thereby obtain a tax base directly, which is certain to be welcome in times of rampant fiscal deficits. At the same time, the privacy of irreproachable citizens is being preserved. Moreover, Swiss banks will concentrate on attracting tax-compliant monies in the future. Last but not least, the Swiss financial centre advocates improving market access to financial services originating in Switzerland. The Swiss financial centre is characterized by openness toward foreign countries and exemplary regulation. In this sense and particularly also with regard to the adoption of the international OECD standards in administrative cooperation, unilateral discrimination between closely linked trade partners is unacceptable and must be eliminated.
The success of this forward strategy further depends on everybody involved. Trust is a banker’s most important asset, and after the worldwide financial crisis, the Swiss financial centre must go to any lengths to revitalize that trust.
Being a banker is not merely a profession. It represents a commitment, a mission at the service of the client.
Every staff member, from manager to customer consultant, must independently contribute to the interest of the client and thereby to the benefit of the community. Values like sustainability, predictability, partnership and moderation must return and remain leitmotifs of our actions. By preserving those values, Switzerland will continue to occupy a top position in the concert of international financial centres and possess a strong and diversified financial sector.
With their centuries-old tradition, Swiss banks will take on the challenges awaiting them after the financial crisis. This is not the first time, and likely not the last, that they have to hold their ground in an uncertain environment. The new strategy will enhance the competitiveness of the Swiss financial centre in a globalized world and contribute to the prosperity of the financial sector as well as the entire country. Trust and dependability have always been our strengths. The time has come to consolidate what is already established and to try out new things. If we succeed, the financial centre will continue to play its significant economic role in the future.
Patrick Odier was born in 1955 and studied economics and finance in Geneva and Chicago. Odier has been president of SwissBanking, the Swiss Bankers Association, since September 2009 and senior partner of Lombard Odier Darier Hentsch & Cie since July 2008. He is also vice chairman of Economiesuisse, an organization representing Swiss businesses.