Switzerland remains the world’s largest cross-border wealth management destination, but its banks are in damage control mode to limit insolvency of borrowers.
In 2019, Swiss banks recorded a growth of 13.8% in assets under management totalling CHF7.9 trillion (around $8.6 trillion) according to the Swiss Bankers Association (SBA) on Tuesday. This is twice the GDP of neighbour Germany.
Switzerland remained the world’s top cross-border wealth management destination with CHF2.3 trillion in volume at the end of 2019. This accounts for a quarter of the global market share and puts it far ahead of second placed Hong Kong which attracted CHF1.8 trillion in 2019. It is also twice the amount claimed by third place Singapore and almost three times that of fourth place Unied States.
However, 2020 and the impact of Covid-19 on borrowers have forced Swiss banks to confront the risk of insolvency of companies. Member banks of the SBA are working to develop common recommendations on how to deal with companies on the brink of folding up.
“Insolvencies or bankruptcies should be avoided wherever possible by ensuring the best possible coordination between the banks supplying the loans and SMEs. This gives companies time to implement the necessary restructuring and recovery measures – and therefore to safeguard valuable jobs,” said SBA chairman Herbert J. Scheidt.
The SBA also wants the government to enshrine its emergency interest-free loans to companies into law “to provide legal certainty for all those involved”. The banking association also expressed its view on any future Covid-19 restrictions.
“Another lockdown must be avoided at all costs provided this is reasonable from an epidemiological standpoint.”