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Nervous savers scramble to protect assets

Cantonal banks are welcoming more net inflows Keystone

Smaller banks are experiencing unprecedented demand for new accounts as savers seek to safeguard their assets from the global financial crisis.

All Swiss banks guarantee SFr30,000 ($26,600) of their clients’ money, prompting many people to spread their assets around different institutions. Officials maintain there is little danger of a Swiss bank collapsing.

Nevertheless, savers are taking no chances with their hard-earned money, having witnessed a steady procession of failed banks in other countries.

Some 1,700 Swiss savers who took advantage of high interest rates recently offered online by Kaupthing Edge faced an anxious wait after the Icelandic bank was taken into state ownership last week. The majority did not invest more than SFr30,000 and are fully covered by the banking guarantee.

But the general uncertainty has resulted in longer-than-normal queues at regional banks and growing demand for banking services offered by supermarket chains.

Many cantonal banks and the banking arm of the post office (Postfinance) guarantee 100 per cent protection for their clients’ assets.

Postfinance does not have recent figures, but told swissinfo that 105,000 customers opened new accounts between January and June this year compared with 80,000 in the corresponding period for 2007.

Lost trust

The Zurich Cantonal Bank has spoken of “thousands” of new accounts being opened every month. Supermarket chains Coop and Migros have both experienced significantly greater demand for new accounts.

Cooperative bank Raiffeisen said its branches are receiving 600 new customers on a daily basis, bringing SFr1 billion in new money every month. “In the Raiffeisen history of over 100 years not one customer has suffered damage,” the bank’s website states.

“Many people have lost trust in the big banks and are transferring their money to us and other institutions,” spokesman Franz Würth told swissinfo.

The big banks, UBS and Credit Suisse, are remaining tight-lipped until their third quarter results are announced in a few weeks.

“There are clients who are worried about their money during the financial crisis. Some of them may respond by diversifying their assets,” UBS spokesman Andreas Kern told swissinfo.

Big banks “safe”

The banking authorities are also cautiously optimistic about the future fortunes of all Swiss banks. UBS may have lost $43 billion (SFr49 billion) in the subprime crisis – the worst record of any European bank – but observers feel the bank has taken adequate measures in the meantime to save it from collapse.

“I am convinced that no Swiss bank will collapse. The Swiss banking system is functioning very well,” Pierre Mirabaud, chairman of the Swiss Bankers Association, said in a Sunday newspaper interview.

The Swiss finance ministry told swissinfo there were no plans to revise the SFr30,000 savings guarantee. And Switzerland has not felt the need to follow the example of other countries that have set up emergency funding to bail out their stricken banks.

swissinfo, Matthew Allen in Zurich

Switzerland confirmed on Monday that it does not need to follow the example of many other countries that have raised massive amounts of taxpayers’ money to bail out stricken banks.

Following the United States’ $700 billion (SFr790 billion) rescue package earlier this month, Britain announced a £37 billion (SFr73 billion) cash injection while Germany was poised to prop up its ailing financial system with a €470 billion (SFr724 billion) hand out.

Spain said it would provide up to €100 billion of guarantees for new debt issued by commercial banks in 2008. Norway and Portugal have also followed suit with their own bail out cash packages.

Germany, New Zealand and the United Arab Emirates are the latest countries to guarantee all bank deposits.

A finance ministry spokeswoman said Switzerland had no immediate plans to launch a state bail out. “We welcome all the measures taken by the G7 states, the European Union and individual governments as a valuable contribution to stabilising the financial markets,” Tanja Kocher said.

Switzerland looks set to escape the worst ravages of the current global financial crisis, according to a newspaper survey published on Monday.

Four out of five respondents told the SonntagsBlick and Le Matin Dimanche newspapers that they were unconcerned about the dramatic bank collapses and the credit crunch.

Only 16% of those asked said they were a little worried while a paltry 1% were fearful of the possible consequences. Four times that number (4%) had absolutely no idea what to think.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR