The Death of Swiss Banking?

Observers are sounding the death knell on Swiss banking again. Is the swan song justified? finews.asia parses the facts.

Swiss finance is an easy mark these days with countless surveys, data and opinions to underscore the dire mood in the industry. The number of Swiss banks has shrunk by one-third to 260 in the last ten years ago, while assets under management have melted by half. Total jobs in the flagship industry have slid below the 100,000 employee mark.

The doom and gloom is due to end of banking secrecy, which many Swiss banks used to help their foreign clients dodge and cheat taxes at home. Rising competition from burgeoning centers like Hong Kong and Singapore and tougher regulation biting into profits have also extracted their pound of flesh.

In short, the days of fat profits have come to an end, as finews.asia has written extensively: Swiss banks are finding themselves working far harder to earn dramatically less. 

Data-Sharing as Body Blow

Unsurprisingly, Swiss banking's reputation has plummeted in the last two years, not least because Swiss officials have adopted an accommodative stance in rolling out data-swapping arrangements laid out by the OECD, or Organization for Economic Cooperation and Development.

The move has prompted many traditional Swiss banking clients, for example from Latin America, to retreat from Zurich and Geneva in favor of centers like Miami. The political concessions translates into a reputational blow for Switzerland's financial center in international rankings – even if those should be taken with a grain of salt, as finews.asia reported.

The End, or New Beginning?

To be sure, Switzerland has to fight to restore the image of its battered financial center: Swiss banking as most observers remember it is a thing of the past. Countless Swiss banks are waking up to the realization that their business models are too one-sided, too expensive, and not client- and service-focused enough.

In other words: the seismic changes have taken their toll. But what gets lost in the gloom and doom is that the industry's paradigm shift can make way for a new era. Depending on your point of view, today's turning point represents the end of an era or a promising new beginning. There are plenty of signals for the latter.