For decades Switzerland has had bank secrecy. Now it does not. Ouch for the rich and corrupt politicians
What is the affect of those with bank accounts in Switzerland.
When Switzerland’s made a decision to accept exchanging banking information, tax and other corporate information with countries with which it has signed agreements to avoid double taxation (including Argentina, Brazil and Uruguay), the financial industry found it must adapt quickly to this new situation or decline.
Switzerland has made it clear that it would no longer help its business clients and foreign politicians protect assets not declared for tax in their country of residence.
Under this new scenario, Swiss banks can no longer live off the perceived cost overruns ( over charging ) on the pretext of providing a pseudo-confidentiality that no longer exists. They have to compete with countries and cheaper, profitable, safe and transparent financial institutions ie New Zealand , where clients are migrating to as investors are better informed and costs are lower.
Many Swiss banks will close the doors, whilst others may merge or grow through acquisitions to gain economies of scale and thus again be profitable.
Accelerated erosion of banking secrecy is forcing many Swiss banks to review their business model to survive.
Forced to make a painful process of adjustment hidden assets, pressure on Swiss banks will continue the automatic exchange of information on the horizon.
In this context, the Swiss Bankers Association (SBA) provides for a consolidation move and even talk of a “structural change” in the sector.
“It can be expected that some banks in the Swiss resort close their doors or are purchased,” he said on the occasion of the publication of its banking barometer.
Selling ads have recently multiplied, and the acquisition by J. Safra Sarasin Swiss private banking business of American giant Morgan Stanley.
Julius Baer, one of the largest Swiss banks, also bought the private banking business in Switzerland and Luxembourg Israeli Leumi Private Bank as the British Standard Chartered seeks buyer for its wealth management division in Switzerland.
There are also rumors that the Swiss giant Credit Suisse would be interested in buying the Julius Baer own.
“Many banks, particularly those of a certain size, try to position themselves in the private bank model of the future,” says Martin Schilling, director of financial services in Switzerland in consulting and audit firm PWC, in an interview with AFP .
One of the niches is now at growth management “on-shore”, ie, in the country of domicile of the customers. To do this, Swiss banks are installed in markets such as Asia.
The volume of business that banks must make to be profitable is now three times more than in activities based in Switzerland since adaptation to the rules of each market generates additional costs.
To survive, small banks will have to focus on a small number of “very specific markets,” he argues.
As Swiss watchmaking – Has no one told them about the new Apple watch. Bye bye swiss watches.
One alternative could be to follow the waiving their banking license and become asset managers, allowing them to benefit from a more flexible legislation.
In fact, according to Schilling, the number of foreign banks will be reduced, affected by the regulatory program with the United States that requires them to rethink their presence in Switzerland.
The accounting firm PWC estimated that the number of private banks in Switzerland could be reduced by 20% over time.
In a study with the University of St. Gall, the KPMG also emphasizes the difference between the small number of institutions with strong results last year and the rest of the sector.
Of the 94 establishments counted, 36% were in continuous decline.
“It is an industry that takes a long time to change,” Osmond found Plummer, professor of European University of Geneva, so that banks can not rely solely on past reputation.
Internet, customers can compare the results of their banks more easily and ask if they are willing to pay more when they can go to another place that charges less.
Osmond Plummer compares the situation to that of a Swiss watchmaker in the 1970s, when it was severely affected by the Asian watches, before regaining ground with the momentum of Swatch, the famous watch brand colored plastic, and then focus on the luxury segment.
But for entities under has the challenge of reinventing it will be more difficult.
Last week, Pictet and Lombard Odier two Genevan prestigious banks, rose for the first time in its history the veil on their accounts and brought to light a solid capitalization.
The tax havens that are left are mostly American or British. ie Delaware, Panama, Turks, Isle of Man etc