(Redirected from Swiss bank)
'Banking in Switzerland' is characterized 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 the Federal Banking Commission (FBC), which derives its authority from a series of federal statutes.
Overview
Switzerland is an economically advanced and prosperous nation, with a
gross domestic product (GDP) larger than that of some larger
western European nations. In addition, the value of the
Swiss franc (CHF) has been relatively stable compared to that of other
currencies.
[1] In 2003, the financial sector comprised an estimated 14% of Switzerland's GDP and employed approximately 180,000 people (110,000 of whom work in the banking sector); this represents about 5.6% of the total Swiss workforce.
[1]
Swiss
neutrality and
national sovereignty, long recognized by foreign nations, have fostered a stable environment in which the banking sector was able to develop and thrive. Even though it is near
Europe's geographical center, Switzerland maintained neutrality through both
World Wars; is not a member of the
European Union or the
European Economic Area; and was not even a member of the
United Nations until 2002.
[1][1]
1 Swiss franc
Currently an estimated one-third of all funds held outside their country of origin (sometimes called "
offshore" funds) are kept in Switzerland. In 2001 Swiss banks managed
US$ 2.6 trillion. The next year it only handled
US$ 2.2 trillion, US$ 400 billion less than before. This has been attributed to both a
bear market and possibly to stricter regulations on Swiss banking.
[1]
The
Bank of International Settlements, an organization that facilitates cooperation among the world's
central banks, is headquartered in the city of
Basel. Founded in 1930, the BIS chose to locate in Switzerland because of the country's neutrality, which was important to an organization founded by countries that had been on both sides of
World War I.
[1]
Foreign banks operating in Switzerland manage 870 billion Swiss francs worth of assets (
as of May 2006).
[1]
Law and regulation
The Federal Banking Commission, an independent agency of the Swiss government within the Federal Department of Finance, supervises most banking-related activities as well as
securities markets and
investment funds.
[1] Regulatory authority is derived from several
statutes.
The office of the Swiss Banking
Ombudsman, founded in 1993, is sponsored by the Swiss Banking Ombudsman Foundation, which was established by the
Swiss Bankers Association. The ombudsman's services, which are offered free of charge, include
mediation and assistance to persons searching for dormant assets. The ombudsman handles about 1,500 complaints raised against banks yearly.
[1]
Statutes
Banking law of 1934
The Swiss Parliament passed the Banking Law of 1934, which codified the rules of secrecy and criminalizes violation of it. The secrecy provisions were not included in the first draft of the law, which mainly concerned administrative matters such as bank supervision. The provisions, found in Article 47(b), were added before passage of the bill due to Nazi authorities' attempts to investigate the assets of Jews and "
enemies of the state" held in Switzerland.
[11]
Electronic payments
Swiss banks, as well as the
post office (which handles some
financial transactions) use an
electronic payments system known as Swiss Interbank Clearing (SIC). The system is supervised by the Swiss National Bank and is operated via a joint venture.
[1] SIC handled over 250 million transactions in 2005, with a turnover value of 41 trillion Swiss francs.
[1]
Major banks
As of 2006, there are 408 authorized banks and securities dealers,
[1] ranging from the "Two Big Banks" down to small banks serving the needs of a single community or a few special clients.
UBS AG and
Credit Suisse are respectively the largest and second largest Swiss banks and account for over 50% of all deposits in Switzerland; each has extensive branch networks throughout the country and most international centers.
Due to their size and complexity, UBS and Credit Suisse are subject to an extra degree of supervision from the Federal Banking Commission.
[1]
UBS
Main articles: UBS AG
UBS came into existence in June of 1998, when
Union Bank of Switzerland, founded in 1862, and
Swiss Bank Corporation, founded in 1872,
merged. Headquartered in
Zürich and
Basel, it is Switzerland's largest bank. It maintains seven main offices around the world (four in the
United States and one each in
London,
Tokyo, and
Hong Kong) and branches on all five continents.
[1]
As of 2005, UBS had a
net profit of US$7.2 billion, a
market capitalization of over $100 billion, and 69,569 employees.
[1]
UBS has used the slogan "You & Us" in their marketing communication. The slogan aims to highlight the firm's client-based approach. Source:
UBS branding
Credit Suisse
Main articles: Credit Suisse
Credit Suisse is the second-largest Swiss bank. Based in Zürich, it was founded in 1856; its market capitalization (as of 2007) is $95.2 billion, and the company has about 40,000 employees. Credit Suisse Group offers private banking, investment banking and asset management services. It acquired
The First Boston Corporation in 1988 and merged with the
Winterthur insurance company in 1997; the latter was sold to
AXA in 2006.
[1]
Central Bank
Main articles: Swiss National Bank
Swiss National Bank headquarters in
Berne
The Swiss National Bank serves as the country's
central bank. Founded by the Federal Act on the Swiss National Bank (
16 January 1906), it began conducting business on
20 June 1907. Its shares are publicly traded, and are held by the
cantons, cantonal banks, and individual investors; the federal government does not hold any shares.
[1] Although a central bank often has regulatory authority over the country's banking system, the CNB does not; regulation is solely the role of the Federal Banking Commission.
[1]
Private banks - Private bankers
Private banker means that the bank offers private banking services and that its legal form is a parternship. The first private banks were created in Geneva in the late
1700s as partnerships, and some are still in the hands of the original families. In Switzerland, such private banks are called private bankers (a protected term) to distinguish them from the other private banks who are usually share corporations.
Lombard Odier Darier Hentsch & Cie
Cantonal banks
There are, as of 2006, 24
cantonal banks; these banks are state-guaranteed semi-governmental organizations controlled by one of
Switzerland's 26 cantons that engage in all banking businesses.
[1] The largest cantonal bank, the Zürich Cantonal Bank, had a 2005 net income of CHF 810 million.
[1]
Banking privacy
Swiss bank secrecy protects private banking information; the protections afforded under Swiss law are similar to confidentiality protections between doctors and patients or lawyers and their clients. The Swiss government views the right to
privacy as a fundamental principle that should be protected by all
democratic countries. While secrecy is protected, in practice all bank accounts are linked to an identified individual, and a prosecutor or judge may issue a "lifting order" in order to grant law enforcement access to information relevant to a criminal investigation.
[1]
Taxation
Swiss law distinguishes between
tax evasion and tax fraud. If any holdings are not declared to the
taxation authorities, a natural or legal person commits tax evasion. Tax evasion is not considered an offence, but only a misdemeanour. It is assumed that failed declaration of one's assets is not sufficient evidence for criminal intent, as the chance of unintentional failure is too high. However, tax fraud is considered a criminal offence under Swiss law and prosecuted according to the Swiss Penal Code. A forged tax declaration, like the statement of significantly below-market valuation of real estate or the counterfeiting of bank statements, is such a criminal offence of tax fraud.
European Union
Pressure on Switzerland has been applied by several states and international organizations attempting to alter the Swiss privacy regime. The
European Union, whose member countries geographically surround Switzerland, has complained about member states' nationals using Swiss banks to avoid taxation in their home countries. The EU has long sought a harmonized tax regime among its member states, although many Swiss banking officials (and, according to some polls, the public) are resisting any such changes.
[1]
Since
July 1,
2005, Switzerland has charged a
withholding tax on all interest earned in the personal Swiss accounts of European Union residents.
[1]
In 2001 and 2002, an
amnesty was offered by the
government of Italy in which taxes and penalties on repatriated funds were limited on funds repatriated from Switzerland; 30 to 35 billion
euro worth of deposits were returned to Italy.
[1] In 2003, a similar amnesty was approved by the
government of Germany.
[1]
United States
In January of 2003, the
United States Department of the Treasury announced a new information-sharing agreement under the already extant
U.S.-Swiss Income Tax Convention; the agreement is intended to facilitate more effective tax information exchange between the two countries. Said a Treasury official, "This Mutual Agreement should improve
our access to needed information" under the terms of the tax treaty.
[1]
Money laundering
There are several measures in place to counter
money laundering. The Money Laundering Act sets forth requirements of account holders' identification, and requires reporting of any suspicious transactions to the Money Laundering Reporting Office.
[1]
According to the
CIA World Factbook, Switzerland is "a major international financial center vulnerable to the layering and integration stages of money laundering; despite significant legislation and reporting requirements, secrecy rules persist and nonresidents are permitted to conduct business through offshore entities and various intermediaries..."
[1] However, Switzerland's cooperation in transnational financial issues has been praised by several major U.S. officials. A
Federal Bureau of Investigation anti-terrorism official noted that Switzerland was one of several countries to participate in joint task forces targeting financing of
Al-Qaeda terrorist cells; a former Assistant
Secretary of the Treasury praised Swiss cooperation and the country's assistance in the finding and freezing of terrorist and
Iraqi assets.
[1]
Numbered bank accounts
Main articles: Numbered bank account
Some bank accounts are afforded an extra degree of privacy. Information concerning such accounts, known as
numbered accounts, is restricted to senior bank officers, rather than being accessible to all the employees of a bank. However, the information required to open such an account is no different from that of an ordinary account; completely anonymous accounts are prohibited by law. Should a criminal investigation take place, law enforcement has access to information related to a numbered account in the same way it has access to information about any other account.
[1]
Swiss banks and World War II
Several inquiries have been made into the conduct of Swiss banks during the
National Socialist (Nazi) regime in Germany (1933–1945), especially regarding funds deposited by or stolen from victims of the
Holocaust.
In October of 1996, as inquiries into the banks' activities during the Holocaust were ongoing, Swiss
ambassador to the United States Carlo Jagmetti admitted that some banks prevented Holocaust survivors from accessing their funds, although he disputed the amounts claimed in lawsuits by survivors. Among those leading inquiries into the banks' conduct during the war was
Alfonse D'Amato, a
United States Senator from
New York.
[1] United Bank of Switzerland security guard
Christoph Meili became a prominent
whistleblower when he prevented the destruction of Holocaust-era records and brought attention to their existence. Due to his actions, Meili lost his job and received death threats; he became the first Swiss citizen ever granted
political asylum in the United States. After settling in
southern California, he was honored by the
Los Angeles Jewish community.
[1] Meili was supported financially by several Jewish organizations, and was offered a full scholarship at
Chapman University in
California.
[1][1] In 1998, an international panel of historians released a study that claimed a significant amount of gold had been stolen from Holocaust victims, as well as the treasuries of conquered countries, and deposited in the Swiss National Bank. The panel found that, despite evidence of theft and wrongful acquisition of the gold, the SNB continued to accept the deposits.
[1] In 2000, a
United States District Court judge approved a
US$1.85 billion settlement between several Swiss banks and Holocaust victims. An estimated 50,000 accounts in Switzerland were opened by victims during the Nazi regime; some banks refused to make payments to victims' families because of the lack of
death certificates.
[1] However, an article published on
October 13 2001 in ''
The Times'' of
London claimed that the tribunal entrusted with tracing Holocaust era accounts found that only 200 of the 5,570 abandoned foreign accounts in question, containing about 12 million dollars, could be traced back to Holocaust survivors; most of the abandoned accounts were owned by wealthy
gentiles, and half the accounts contained less than 1,000 francs.
Swiss Banks to return Abacha Funds to Nigeria
The Swiss foreign ministry says it has done all it can to ensure that funds stolen by the late Nigerian dictator
Sani Abacha were used properly in his homeland.
The authorities were responding to allegations that $200 million (SFr240 million) of $700 million handed back by the Swiss Banks to Nigeria had been misappropriated.
[1]
International competition
With recent changes in the Swiss bank secrecy regime, other states, such as
Panama and
Singapore, have attracted depositors seeking privacy and protection. Having taken steps to make its banks more attractive, Singapore strengthened penalties for violators of bank secrecy (and now imposes steeper fines and longer jail sentences for offenders), and modified its laws on
trusts and inheritance. Singapore is also now the location of Credit Suisse's international banking headquarters.
[1]
Panama on the other hand, is Latin America's largest banking centre, where major international banks are located. Often criticized for alleged non-compliance of banking regulations aimed to deter money laundering, in reality the Panamanian Banking Centre is far more strict than several States of the United States and other banking centres of the Caribbean.
Trivia
Swiss banks have figured prominently in several works of fiction.
★ The book and film ''
The Da Vinci Code'' feature the fictional
Depository Bank of Zürich.
[1]
★ In the novel and film ''
The Bourne Identity'', main character Jason Bourne wakes from amnesia and finds a Swiss bank account number implanted in his hip.
[1]
★ In the film ''
Munich'', the
Mossad agents' operational and personal funds are deposited into a Swiss bank account.
★ In the film ''
Street Fighter'', General
M. Bison asks
Dee Jay if his $20 billion dollars have been deposited in his Swiss bank account from the AN forces.
★ In the film ''
Inside Man'', a young American working at a Swiss bank during World War II receives handsome sums for collaborating with the Nazis, including
diamonds and stolen treasures. These remain in the Manhattan Trust Bank in
New York City which he finances after the war, presumably using other monies gained through his involvement with the Nazis. It is the first branch and the flagship of a banking empire which subsequently makes him extremely rich over the next 60 years.
★ In the 2006
James Bond film ''
Casino Royale'', ten-million-dollar buy-ins from several
high-rolling poker players are kept in an
escrow account in a Swiss bank (Basel bank) so that the winner may collect the total sum upon the game's completion.
★
Paul Erdman and Christopher Reich, former Swiss bankers, have each written several best-selling novels about Swiss banking.
★ In
Book 1 of the
Artemis Fowl series, when Artemis Fowl is listing some of his major achievements in life, he mentions a computer program he wrote to wire money from several Swiss bank accounts.
★ A Swiss bank account plays an essential role in the 1997 film ''
The Spanish Prisoner'', starring
Steve Martin.
See also
★
Gold as an investment
★
Offshore bank
Notes
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11. The Swiss Banking Secret: From a Legal View, Mueller, Kurt, , , The International and Comparative Law Quarterly, 1969
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External links
★
The Swiss banking law, as amended, from
KPMG.
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