After spending SFr75 million ($50.6 million) on its Redsafe Internet portal, Swiss Life has given up on online banking services.
Redsafe was launched to great fanfare less than eight months ago, selling itself as Switzerland's first integrated financial services portal - offering banking, brokerage and insurance services over the Internet.
But weak stock markets have hit trading volumes sharply, putting paid to Redsafe's aim of signing up 18,000 customers in the first few months of operations. In the event, the portal only managed to attract 3,200 customers.
"The market environment in the second half of 2001 was very bad. We have been looking for partners for Redsafe since the beginning of this year but were unable to find any," Simone Zindel, spokeswoman for Swiss Life, told swissinfo.
Online financial services in Switzerland have been undergoing a shakeout, with a number of smaller players bowing out. They cite poor market conditions and high costs incurred in making their systems compatible with the new blue chip exchange, virt-x.
"In recent years there was a lot of stock market hype because of large capital gains," Rene Locher, an insurance analyst at Bank Sarasin, told swissinfo. "But today current stock price developments and the fact that people have lost a lot of money means that it makes absolutely no sense to run such an online financial portal."
In March, Zurich Financial Services decided to abandon Internet banking after losing SFr415 million. And two private banks, Vontobel and Julius Bär also threw in the towel after chalking up substantial losses.
Locher said it would be some time before the markets recovered "to levels we had seen between 1997 and 2000... so the outlook for online financial portals remains negative".
Redsafe's demise leaves just five Internet banks and brokers operating in Switzerland, in addition to those run by the big banks, UBS, Credit Suisse.
The announcement to close Redsafe, which will involve 55 job losses, comes after rumours surfaced that Swiss Life could be a takeover target. Its shares jumped on the news.
Swiss Life, Switzerland's largest life insurer, has lost about 70 per cent of its share value this year as its resources dwindled amid plunging global equity prices.
By Karin Kamp
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