Switzerland's foreign banks recorded a substantial rise in profits and in the volume of assets under management last year despite increased competition from Asia.This content was published on May 29, 2006 - 18:11
The 150 banks administered SFr873 billion ($713 billion) of clients' money, an increase of 17 per cent from 2004, while recording a 28 per cent rise in profits to SFr2.363 billion.
Foreign banks account for more than 15 per cent of the entire industry's profits in Switzerland and make up 45 per cent of the total number of banks, employing nearly one fifth of the sector workers.
The figures, released on Monday by the Association of Foreign Banks in Switzerland, played down fears of an exodus of wealth from the country to the rising financial centres in Asia, notably Singapore.
Fears have recently been expressed that attacks on banking secrecy and new European laws requiring account holders to declare interest earned on savings held in foreign countries would threaten Switzerland's status as an international banking centre.
Association Secretary General Martin Maurer told swissinfo that there has been no obvious signs of erosion so far.
"For a while now there has been talk that increased regulations, such as the European Union tax scheme, would favour Singapore which has much looser regulation," he said.
"There is evidence that money from other traditional offshore centres has gone to Singapore that has allowed it to build a reputation as a growing private banking sector.
"So far we have not seen much of an impact in Switzerland, but if we keep building up regulation in an excessive way then fresh money could start going there."
Maurer believes that Switzerland has been cushioned from the effects of regulation thanks to its continued defence of banking secrecy. And he maintains that foreign banks are still flourishing in Switzerland because they offer a personal service that local banks cannot match.
"UBS and Credit Suisse [Switzerland's largest banks] are well known in Switzerland, but foreign banks have an identity that is more recognisable to foreign investors," he told swissinfo.
"Investors in Latin America, for example, could be more inclined to deal with a Spanish bank than with UBS.
"Private banking in Switzerland also has a long tradition of confidentiality and people know banks here will stick to that principle."
swissinfo, Matthew Allen in Zurich
A treaty between Switzerland and the European Union, that came into force on July 1, 2005, compelled banks to collect a withholding tax on savings interest earned by EU country residents with Swiss bank accounts.
The regulation is designed to stop EU citizens evading tax in their own countries, but crucially protects Swiss banking secrecy.
The Swiss finance ministry said in April that a first collection had totalled about SFr138 million.
The largest foreign bank in Switzerland is HSBC that manages assets of approximately SFr140 billion.
BSI Bank, formerly known as Banca Della Svizzera Italiana, is in second place with SFr52 billion of managed assets.
A total of 69 banking institutes are based in Zurich, 50 in Geneva and 16 in Lugano, with the rest spread around Switzerland.
This article was automatically imported from our old content management system. If you see any display errors, please let us know: firstname.lastname@example.org