GENEVA: Switzerland’s banking sector, facing the end of the secrecy that was once the bedrock of its business, is turning to China as it seeks new markets for the future.
“One of the first ports that the Swiss financial centre is steering for is the port of China,” Claude Alain Margelisch, chief executive of the Swiss Bankers Association, told reporters in Geneva here the other day.
“Together with our member banks, we want to make Switzerland an international hub for the renminbi,” also known as the yuan.
Switzerland will abandon its long prized banking secrecy in 2017 when it starts automatically exchanging account details with other countries, and with it goes one of the main attractions of placing money in its banks.
For generations, investors have paid Swiss banks high fees to hide their money from tax authorities around the world, providing a lucrative stream of revenue for them.
But the global financial crisis prompted demands for a tougher regulatory environment.
Switzerland was reluctantly forced to accept the new rules, leaving the banks facing an uncertain future.
Not only are private Swiss banks looking for new sources of revenue, but they have also faced probes and massive fines from countries accusing them of abetting tax dodging.
“The Swiss financial center and the Swiss banks have recognized the need for action,” said Margelisch.
“We have drawn the necessary conclusions from previous mistakes and introduced counter-measures.”
In 2013, Switzerland still held 26 per cent of global offshore assets, or US$2.3 trillion (S$3.02 trillion), according to an analysis by Boston Consulting.
But Nicolas Pictet, president of the Geneva Financial Center, which represents hundreds of banks and financial companies, warned in October that the sector must wake up.
Pictet, a managing partner in his family’s eponymous bank, said Geneva must stop “behaving like hedgehogs on a freeway” as they risked losing out to other financial centres.
Many now believe that China could be the answer.
Margelisch said relations between China and Switzerland were stronger than ever, noting a free trade agreement signed in 2013 and which came into force this year.
Officials from both sides have met twice in the past year to discuss finance, while national banking associations held their first “financial round table” in June.
The Swiss National Bank and the People’s Bank of China also reached a bilateral swap agreement a currency exchange deal in July.