Swiss private banks could lose their competitiveness if Switzerland does not revise its tax laws and finalise agreements to improve banks’ access to European markets, the chairman of the Swiss Private Bankers Association (SPBA) warned.
Speaking at SPBA’s annual conference in Geneva, chairman Nicolas Pictet, partner at Pictet & Cie, said a new decision by the country’s Federal Council could negatively affect the sector.
"All these discussions [about tax] are important, but they lead us to neglect priorities that should guide the policies for our financial centre. I think in particular of our competitiveness," Pictet said.
"Our country runs the risk of being dropped from the squad and finishing the race out of time, in the complete indifference of the political world," he said.
The banker added such a situation would have serious consequences for the "reputation of the country."
Competitiveness and market access "neglected"
In 2010, Pictet explained, the Federal Council defined four strategic pillars for Switzerland’s financial market policies: resistance to crises, the country’s integrity, competitiveness and market access. He said competitiveness and market access had been neglected.Pictet expressed concerns for Swiss private banks’ ability to work "across borders", explaining that the domestic market was important, but seldom formed the heart of the country’s financial centre.
"The issue of market access is probably the main concern we will have in the coming years," he added. "If this problem is not resolved in time, what will happen then?"
The SPBA chairman said it was "very easy to predict" that the industry would suffer relocation, with "our financial centre atrophied over time".
"We must recognize that, ultimately, only a duly signed agreement can give the Swiss financial centre the legal certainty it needs in its relations with the European Union," Pictet concluded.
Predictability of Swiss law "circumcised"
Member of the SPBA and partner at La Roche & Co 1787 Christoph Gloor explained: "With the very special legislative system (the separation of powers and the direct democracy) and in terms of legal certainty, Switzerland has had a competitive advantage that has contributed greatly to its prosperity."
In recent years, Gloor said he has witnessed that the legal certainty and the predictability of the Swiss law "were circumcised", which had unsettled "so many private bank clients".
This bilateral agreement, which he said will come at the end of a "long and bumpy" road, will not be signed before the institutional record is set between Switzerland and the EU.
43.3% value from Swiss private banks
In 2012, more than half of the added value created by Swiss banks resulted from activities of wealth management for institutional and private clients, according to research by Boston Consulting Group.
Of that value, 43.3% resulted from the private banking sector, while 10.2% came from the asset management sector.
Talking purely about employment in the private banking sector, Pictet explained that since 2010, the period during which the new Federal Council’s strategy was put in place, the SPBA group of banks continued to see a slight increase in jobs locally, where 234 jobs were created (or a 5% increase). Pictet said there was also an increase internationally, with 444 new positions created (a 22% increase).