Is Switzerland still synonymous with safe banking?
Is Switzerland still synonymous with safe banking?
Credit Suisse is (or perhaps now “was”) old. The bank, which was bought over the weekend by UBS, was founded in 1856. One reason that UBS — also a Swiss bank — reportedly purchased its rival along with all its money troubles is that UBS was worried if Credit Suisse went bankrupt, it would damage Swiss banking’s overall brand.
Switzerland’s reputation for safe, secret banking goes back to at least the First World War. Switzerland became a hub of financial transactions with people in lots of countries — no matter what side they were on, said Harold James, a historian at Princeton University.
“So the story is really intimately linked with the story of Swiss neutrality,” he said.
But the flip side of the word secret? Shady.
“Swiss banks would take money from pretty much anywhere and would not ask too many questions about it,” said Andrew Hilton, an economist and independent consultant based in the United Kingdom.
Other countries didn’t want their citizens shadily stashing money in Switzerland, points out Pace University economics professor Niso Abuaf, who used to work at Credit Suisse.
“Because of pressure from both the European regulators and the U.S. regulators, Swiss banks stopped being a tax haven,” he said. “And they had to compete in other ways in the global marketplace.”
So, in the last couple of decades, Swiss banks pivoted their brand, promising excellent wealth management — a lot like American banks. But they had the advantage of not being American, economist Hilton said.
“Lots of people don’t view the Americans quite as positively as Americans do. You might want to put your money somewhere that isn’t as susceptible to Washington’s pressure.”
The future of Swiss banking really hinges on the new UBS — which historian James points out will have a balance sheet bigger than the whole Swiss gross domestic product.
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