Banks hit back at “capital flight” claims

Urs Roth (right) says banks are being targeted unfairly Keystone Archive

Switzerland’s bankers have rejected charges that banking secrecy is to blame for wealthy investors from poor countries abandoning their home markets.

The Swiss Bankers Association lashed out on Wednesday at critics who last month accused the country of encouraging “capital flight”.

“It is a fact that many developing countries have barely-functioning financial markets and thus offer few opportunities for investment,” said Urs Roth, the association’s chief executive.

“As long as wealthy people in the developing countries are also allowed to invest their assets profitably, it is clear that they will choose to place some of their wealth abroad.”

Roth’s comments reflect anger among Swiss bankers over a campaign launched last month by some 50 non-governmental organisations, who claimed poor countries were losing billions in revenue every year because of Swiss banking secrecy.

Campaigners accused banking centres such as Switzerland, Luxembourg and the Channel Islands of harbouring fortunes beyond the reach of tax authorities in developing countries.

Biased claims

Roth said the claims – made by groups such as the Berne Declaration – were as ill-considered as some of the arguments against globalisation.

“The arguments put forward were highly generalised. Where facts are not available, bold assertions are made… from biased sources,” he said.

“Once again, Swiss bank-client confidentiality is being blamed for economic problems in some part of the world – this time in developing countries,” he said.

Roth said Switzerland was not the only country attracting assets from developing countries.

He suggested that similar volumes of assets were to be found in other international financial centres such as London, New York, Paris and Frankfurt.

“It is neither factually correct nor fair to point a moralising finger just at Switzerland,” he added.

“As long as these assets have not come from corruption or plundering dictators, Switzerland has no reason to be ashamed.”

swissinfo, Jacob Greber in Zurich

In brief

Switzerland manages around 35 per cent of the world’s private and international offshore funds, estimated at $2 trillion (SFr2.62 trillion).

According to the Swiss National Bank, there were SFr170 billion in trust funds from developing countries in Swiss accounts in 2001.

NGOs claim the amount held in Swiss banks in untaxed accounts adds up to five times the amount Switzerland spends each year on development aid.

Switzerland’s development aid budget amounted to SFr1.63 billion ($1.32 billion) in 2001.