THE SWISS FINANCIAL CENTER: GAINING OR LOSING INFLUENCE?
Blaise Goetschin, CEO of BCGe February 1, 2022
For his third time to present to the club since 2013, Mr. Goetschin gave the audience an overview of where Switzerland stands today in terms of its influence in the financial world.
He started by reassuring us that Switzerland is currently in a solid position, as it has a strong geopolitical base, a favorable economic environment, and a history of success as a financial center. The S& P has maintained its AAA status in 2021, ranking it at the same level as Singapore and Germany, and higher than its neighbors France (AA) and Italy (BBB), as well as the UK (AA). Geneva itself it ranked AA-, and of the top banks in Geneva, USB is rated A+, Credit Suisse A-, and the BCGe AA-.
Switzerland also takes advantage of its prime location in the heart of Europe, while not belonging to the EU, and having a strong, independent currency. Furthermore, its historic stability and neutrality, along with low public debt, puts it in a strong position to lead in financial centers. He added that Switzerland has managed the Covid pandemic well.
The country also has a favorable economic environment, with its high rankings in competitiveness, diversified industry types and company sizes, its orientation towards international trade, reasonable taxation and liberal legislation. He noted that the country currently boasts 805 multinational companies.
And while the Swiss financial center has a strong business model (with 25% of managed assets offshore and 243 banks, including the two giants Credit Suisse and UBS), there have been several warning signs in the recent past that the finance industry should take precautions. Notably, he mentioned the Minder initiative (a 2013 initiative meant to control executive pay of companies listed on the stock market, and to increase shareholders' say in corporate governance), as well as a loss of influence to other centers such as Frankfurt, Paris, New York and London. In fact, he mentioned, there are 18,000 less jobs in finance than there were 10 years ago, and nearly 70 fewer banks.
Nonetheless, Switzerland has a key role to play, especially if it confirms its position as a valuable partner with the EU. Massive public debts in other Western countries offer opportunities for safe havens. The geopolitical instability in Asia makes Switzerland more attractive. And the uncertainty in leadership in both Germany and France now and in the near future all play into the favor of Switzerland as a safe, reliable financial center.
As a path to enhancing the global reach of Switzerland, Mr. Goetschin recommends the country continue to be a safe haven for offshore assets; continues to encourage innovation; maintains a competitive level of taxation; provides better access to markets; recruits leaders in finance who can contribute to its reputation; and that it develops synergies with London.
In conclusion, Mr. Goetschin’s analysis of the Swiss financial center’s influence in the world was positive, as long as its leaders steer the industry in the right direction, towards “smart regulation versus over-regulation,” and that Switzerland’s unique selling points of high-quality service, deep know-how, and its international foothold be protected and reinforced.