Britain announced on Monday that it has signed a trade deal with Switzerland, in what could be a pre-Brexit reassurance to private banks and their clients in the two countries.

The trade secretary, Liam Fox, signed the “UK and Switzerland trade continuity agreement” in the Swiss capital Bern on Monday. The deal, which will come into effect after Britain leaves the European Union, is the biggest since the UK’s vote on Brexit.

“The agreement simplifies trade and allows businesses to continue trading freely, without any additional tariffs. It continues the elimination of duties on the vast majority of goods traded between the UK and Switzerland,” the UK’s Department for International Trade said in a statement.

What does this mean for private banks and HNWIs?

Trade between Britain and Switzerland reached £32.1 billion in 2017. Though UK Swiss trade largely consists of vehicles, watches, and pharmaceutical products, financial services plays an increasingly important role.

About CHF 51 billion in direct investments made their way from Switzerland to the UK in 2015, making Britain Switzerland’s fifth most important destination for direct investments according to its Federal Department of Foreign Affairs. As many as 93,000 jobs in the UK depend on Swiss investments, the department estimates. 

Much of these investments come directly from HNWIs. According to GlobalData, 29.5% of Swiss HNW assets are now held outside of the country. The UK, US and Germany are the most popular destinations according to the data firm.

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“The UK-Switzerland trade should provide some degree of comfort for firms doing cross border business,” Dean Turner, UK economist for UBS Global Wealth Management told PBI.

UBS is one of a number of Swiss private banks with operations in the UK. Many more wealth and fund managers registered in both countries could also benefit from the deal.

Could UK Swiss trade increase?

In December the EU threatened Switzerland with ending its ‘equivalence’ agreement unless changes to works rights were introduced.

The ‘equivalence’ arrangement allows EU investors to trade on Swiss exchanges and vice-versa. Trading in EU equities will need to be brokered through local banks if equivalence is withdrawn. Shares in Swiss stocks, such as Nestlé, Novartis and Roche, could be affected if EU citizens withdraw their funds from Swiss exchanges.

The Swiss government has delayed a decision on the ‘institutional agreements’ put forward by the EU pending a public consultation in the summer. However, any change in equivalence could result in further UK Swiss trade.

“Most of the foreign business with Swiss equities is taking place via London and from there a lot of business could come back to Switzerland despite Brexit,” Luzernerzeitung, a daily Swiss newspaper reported in December.

With the UK already pivotal in Swiss markets, any chances to equivalence could increase trade between the two countries.

While news of the UK Swiss trade deal is a positive for both countries, it is just one of a raft of such agreements that need to be negotiated ahead of Brexit.

“Although this news is undoubtedly welcome, the UK still needs to replicate existing trade deals which cover over 70 non-EU countries and around 14% of UK exports,” says Turner. “We are going to need more progress on the EU talks in combination with further headway on non-EU deals in order lift the cloud of uncertainty.”