Swiss banking: past and present: Swiss News looks at Swiss private banking, a 500-year-old industry that endured centuries of change, and how it is dealing with new global dynamics.

AuteurMarwan, Mike
Fonction Money

Swiss private banking marked its first major milestone in the Eighteenth Century when Louis XVI appointed a private banker from Geneva, Jacques Necker, as France's director of State Finances. Equally important, was a widespread perception that Switzerland is a safe place to put money. In the nineteenth century, its political neutrality was declared. The forbidding alpine terrain was seen as discouraging invasion.

Banking on Service

Having said that, Swiss bankers' genius lay in their ability to change with the times and provide the world's elite with funds and services that met their most pressing needs, from military expeditions in the Seventeenth and Eighteenth Centuries, to industry and railways in the Nineteenth Century, and on to the Twentieth Century, when the banks helped protect the world's growing wealth from rising taxation, political upheaval and a growing culture of litigation.

Stiff Competition

In recent years, the promise of substantial profits in private banking coupled with increasing stability in world politics managed to lure significant competition from global financial centres and especially small island nations with few resources. Facing stiff competition and a worldwide credit crisis in the early 1990's, the Swiss private banking industry, was forced to restructure which led to the loss of thousands of jobs and to takeovers of a number of private banks.

New Regulations

Adding to the industry's problems are new roles and regulations passed by the Swiss government to increase banks' transparency, and disclosure in response to pressures from the European Community and United States.

The new regulations are meant to appease Europe's growing unease with tax evaders and to assist with United States with its war on terror. However, implementing these regulations is proving to be a costly undertaking, forcing small and mid-size private banks to increase their staff in order to meet the regulatory requirements.

Adapting To Change

The changing environment is prompting the Swiss private banking industry to embark on a process of transformation to survive and...

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