Posts Tagged Swiss Offshore Banking

What a timely article by today’s The Economist.
http://www.economist.com/businessfinance/PrinterFriendly.cfm?story_id=14174467
A fourth of the world’s offshore money is in Switzerland, of which a small percentage is from US citizens. The Swiss are calm because “the concessions on privacy are expected to be limited.” In short, clients have fled a bank not a country and the crisis has “vindicated the traditional Swiss model”.  The fact that emerging market banks, including firms from Brazil and China, are choosing Switzerland speaks to its continued credibility and political stability.  US citizens will continue to do good banking in Switzerland but they will have to file a W-9.  Note the surprising reference to Hong Kong and Macau.

Banking in Switzerland is characterised by stability, privacy and protection of clients’ assets and information. The country’s tradition of bank secrecy, which dates to the Middle Ages, was first codified in a 1934 law.[1] All banks in Switzerland are regulated by Swiss Financial Market Supervisory Authority (FINMA), which derives its authority from a series of federal statutes.

As of 11 October 2008 (2008 -10-11)[update], the banking industry in Switzerland has an average leverage ratio (assets/networth) of 29 to 1, while the industry’s short-term liabilities are equal to 260% of the Swiss GDP or 1,273% of the Swiss national debt.[2]

Currently an estimated one-third of all funds held outside the country of origin (sometimes called “offshore” funds) are kept in Switzerland. In 2001 Swiss banks managed US$?2.6 trillion. The following year they handled US$400 billion less which has been attributed to both a bear market and stricter regulations on Swiss banking.[7] By 2007 this figure has risen to roughly 6.7 trillion swiss francs (US$5.7 trillion).

This is important. Most Private Banks in Switzerland are partnerships owned by a small number of managing Partners who stand personally and entirely liable for the Bank’s commitments. As such, the Bank enjoys total financial independence, controls the entire chain of its operations and does not need the approval of shareholders in taking decisions. It abides by the strictest standards in managing the risks inherent to its business, always acting in the best interest of clients.