Vontobel: success through adversity: for some Swiss financial institutions, the tightening of international banking regulations sounded the death knell of their cross-border customer wealth management strategies. In contrast, the Vontobel Group saw it as an opportunity for success ...

AuteurHeddema, Renske
Fonction Business - Interview

Since 2008, when UBS found itself in the U.S. government firing line for complicity in helping U.S. citizens to evade their tax responsibilities, things have not been the same for Swiss banking. Foreign regulators have become stricter than ever, malting cross-border banking all but impossible. Swiss bankers were forced to resort to visiting their clients, disguised as tourists.

In the meantime, the United States designed a new regulatory framework for the worldwide exchange of information on U.S. residents and citizens. This Foreign Account Tax Compliance Act (FATCA), effective from 2013, is a regulatory monster. It will impose a massive administrative burden on every overseas financial institution that deals with U.S. individuals and securities.

The complexity of FATCA has driven many banks to leave the playing field. In contrast, others have taken up the gauntlet and developed a business model specific to the U.S. marl{ct. Vontobel Swiss Wealth Advisors AG, operational since October 2010, is exclusively dedicated to American clients with declared assets. Swiss News talked to company head Martin Steger (37) about the challenges for the new company.

Renske Heddema, Swiss News: Why did Vontobel choose to set up this new company?

Martin Steger: The Vontobel Group always tries to anticipate the challenges of the market. It was clear to us two years ago that the misconduct of UBS would have repercussions. U.S. authorities were erecting an enormous, complex structure, and we became even more aware of its complexity in preparing the new regulatory set-up. This set-up is registered with U.S. authorities and allowed to serve U.S. clients out of Switzerland. Implementing the strategy and structure took over a year: becoming operational took another full year.

The U.S. regulator describes exactly what a banker is allowed to do for American clients, and from what he should refrain. For instance, you are not entitled to service your American clients on U.S. soil when your bank is not licensed in the United States. If a U.S. citizen lives outside the United States, there may still be some leeway in this respect, but U.S. authorities show no mercy when a bank trespasses this law.

There were already restrictions for Swiss banks with U.S. customers, such as the Qualified Intermediary Agreement. What exactly has changed?

With the QI Agreement, a bank agrees to disclose the American assets of its U.S. client to the tax authority [IRS]: non-American assets...

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