24 October 2016
Geneva-based Lombard Odier, which has an office in Hong Kong, plans to increase managed assets in Asia by 20 percent a year. Photo: Lombard Odier
Geneva-based Lombard Odier, which has an office in Hong Kong, plans to increase managed assets in Asia by 20 percent a year. Photo: Lombard Odier

Loss of secrecy helping image of Swiss banks abroad

Something unexpected is happening as Swiss banks lose much of the famous secrecy that provided them with an edge over most of their global peers, attracting huge amounts of cash seeking a tax refuge. 

As Switzerland’s financial secrecy laws, once among the world’s strictest, continue to crumble, banks that don’t depend on them may, ironically, find it easier to expand internationally than those that sold hidden accounts in the past, Bloomberg reported, citing the country’s financial supervisor.

“The shift away from businesses which rely on some elements of banking secrecy is changing the perception” of Swiss wealth managers abroad, Mark Branson, chief executive of the Swiss Financial Market Supervisory Authority, said on a panel Monday at an event in Bern, Switzerland, hosted by the Swiss Bankers Association.

Switzerland has tried to shake off its reputation as the world’s largest tax haven by cooperating with other governments trying to recover taxes due on undeclared assets.

The government says it plans to share foreign clients’ account data with other countries by 2018 as part of a new system designed by the Organization for Economic Cooperation and Development.

For clients from countries that aren’t covered by automatic exchange-of-information agreements, banks will need to conduct risk-based checks, the government said Friday in a message to parliament.

Lawmakers were asked to stiffen the existing anti-money-laundering law.

With the loss of secrecy undermining the offshore market in Switzerland, many private banks have tried to follow UBS Group AG and Credit Suisse Group AG, the country’s two biggest lenders, in building their presence in other financial centers such as London, Hong Kong and Singapore, to tap private wealth and win mandates from institutional investors such as pension funds.

Julius Baer Group Ltd., the third-largest Swiss wealth manager, doubled the assets it managed in Asia after acquiring Merrill Lynch’s non-US businesses from Bank of America Corp. in 2012 and has ambitions to expand in London.

Lombard Odier, Geneva’s oldest bank, has offices in Singapore and Hong Kong and said last year it planned to increase managed assets in Asia by 20 percent a year.

Union Bancaire Privee agreed in March to acquire Royal Bank of Scotland Group Plc’s Coutts International business.

Geneva-based UBP, which bought international private banking operations from Britain’s Lloyds Banking Group Plc in 2013, expects the Coutts deal to bolster its business in the Middle East and Singapore and needs a license approval from authorities in Hong Kong.

Branson, a former banker at UBS who has led the authority since April 2014, said the quality of home-market regulation reflects well on Swiss financial firms seeking to expand abroad.

“What other regulators think about how well our financial center is run, regulated and supervised is one of the critical factors in the competitiveness of our financial center, and I think it’s something that is often underestimated,” he said.

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