switzerland

The Basel-based Swiss Bankers Association, meanwhile, says asset management will be developed further over the medium term “to build an additional cornerstone of the Swiss financial centre”.

A working paper defines action areas which should gradually improve the framework for asset management over coming years. “In relation to the Asset Management Initiative, the various issues are being divided into individual projects. Further important steps include communication with and involving all interest groups, as well as politicians and public authorities,” the SBA said.

Switzerland’s banking industry, worth some SWF2.5trn, represents more than 350 banking institutions but with global regulatory and other pressures, consolidation is considered inevitable.

While the economy and the currency remain strong, Swiss banks have been one of the biggest targets of co-ordinated government action to greater transparency and accountability.

According to a report from data and services provider SNL, Swiss private banks are battling global competition and business pressures, while a study of 100 Swiss banks excluding international players UBS and Credit Suisse by KPMG and the University of St Gallen shows profitability is decreasing.

Analysts in both the asset management and banking sectors acknowledge that recent international tax agreements are pressuring both clients and banks. There were some 148 institutions in private banking at the end of 2012, compared with 169 at the end of 2008, according to the KPMG study.

Regulatory changes will force Swiss banks still offering a “fiscal refuge” to compete on equal terms in the global asset management marketplace, while dealing with the implications of detailed and non-optional legislation like FATCA from the US.

Compliance risk

So far-reaching is the legislation that Swiss financial institutions may review the outsourcing of fund management as a potential source of compliance risk. Last year, Hans-Joachim Jaeger, a Swiss tax expert and partner at Ernst & Young, told InvestmentEurope: “Banks will be reluctant to have external asset managers because they will be liable anyway. This does not mean, necessarily, that all banks will take asset management in-house, but that they are likely to make changes [to their current arrangements].”

That kind of analysis may partly explain the new focus on asset management by the banking and asset management trade organisations. The drive for transparency and the loss of banking secrecy is making many clients more demanding of their wealth managers. Optimists say that is an opportunity for the industry.