The Swiss banking centre is successful and stable 

The Swiss banking centre had another successful year in 2023. Swiss banks’ net income rose, largely on the back of increased interest income. That positive development was far from inevitable, given the various challenges the sector faced. The takeover of Credit Suisse by UBS just under a year ago, along with the measures taken at the same time by the Swiss authorities, provided immediate stability and enabled Switzerland to avert the risk of an international financial crisis by its own efforts. The financial centre also successfully weathered market volatility and geopolitical challenges.  

“2023 showed once again that Switzerland has not only a resilient economy but also a strong and stable banking centre which contributes to the prosperity of the Swiss population”, says Marcel Rohner, Chairman of the SBA, at today’s annual media conference.  

Looking ahead, the banks are unlikely to enjoy an economic tailwind in 2024. “As an association, we are committed to learning the right lessons from the CS crisis, securing the banks’ access to their export markets, and further strengthening the measures in place to prevent money laundering”, Rohner continues.  

TBTF: targeted measures to close gaps in four areas 

The political investigation into the events that led to the demise of Credit Suisse is still ongoing. “In our view, however, the analysis to date clearly demonstrates that the ‘too big to fail’ (TBTF) regulations enabled the acquisition of Credit Suisse thanks to their high liquidity and capital requirements. However, gaps have become apparent, and targeted action now needs to be taken to close them”, says Roman Studer, CEO of the SBA.  

The SBA is arguing the case for measures in four areas: First, as long as they are solvent, all banks should be provided with liquidity quickly if they are no longer able to refinance their operations on the market, but only if they deposit collateral with the Swiss National Bank (SNB). Second, Switzerland should follow other financial centres in introducing a “public liquidity backstop” (PLB). This default guarantee from the federal government to the SNB would allow the latter to provide systemically important Swiss banks that are in recovery or resolution with the liquidity they need. As such, the PLB is an important complement to the TBTF regulations. It enhances system stability and ensures that customers continue to receive services in a crisis. Third, the duty to implement a remuneration policy geared to the long term should be written into law and a lean accountability framework (“senior manager regime”) introduced. Fourth, targeted improvements in the supervisory activities of the Swiss Financial Market Supervisory Authority (FINMA) can be achieved by granting it additional powers if the analysis of the CS case shows this to be necessary.  

The SBA believes that the existing capital requirements for systemically important banks are sufficient and sees no need for stricter measures across the board. “The regulatory adjustments made in the wake of the CS crisis are key to the success of the Swiss banking centre over the next 20 years. The measures outlined can further enhance system stability without weakening Switzerland’s innovative capacity and competitiveness”, adds Roman Studer. 

Securing exportability: improving EU market access and consistently implementing sanctions 

Europe is by far the most important market for Swiss banks’ cross-border wealth management business. For example, a bilateral agreement was concluded with the UK last December. The next step will be to improve access to the EU market overall. “In the SBA’s view, the banks’ concerns regarding market access must be actively placed on the political agenda. An institution-specific approach for the EU would open up vital access for those banks who want it, without requiring Switzerland to adopt EU law comprehensively”, says Roman Studer. 

At a time of growing geopolitical crises, Switzerland’s stability and political certainty make it especially attractive for customers seeking a safe place for their assets. That includes a sanctions policy which pursues a long-term approach, takes account of the rule of law and overarching political principles, and adheres to them systematically. By consistently implementing sanctions, the Swiss banks ensure a clean financial centre and, in so doing, boost the export-oriented economy. 

Strengthening the anti-money laundering regime 

The SBA welcomes in principle the planned law on the transparency of legal entities as a way of further strengthening the measures to combat money laundering. However, it identifies further potential for optimising the current draft. In particular, the authorities’ access to the planned register must be aligned with the purpose of the law and should not lead to the indirect removal of bank-client confidentiality in Switzerland. Lawyers, notaries and fiduciaries, in their capacity as advisors, should also be required to comply with the duties imposed by the Anti-Money Laundering Act.