Swiss Private Banking Industry Unamused At Immigration Vote, Warns On Costs

Tom Burroughes Group Editor London 14 February 2014

Swiss Private Banking Industry Unamused At Immigration Vote, Warns On Costs

The Swiss banking industry is unhappy over the recent anti-immigration vote in the country but has played down fears of an immediate blow to the sector.

The Swiss banking industry has voiced its frustration over the recent decision by electors to vote for curbs on European Union immigrants in Switzerland, but played down fears of an immediate blow to the sector.

This publication contacted a number of organisations – both individual banks and the trade associations representing them – to find out their views about the impact of the 9 February vote, which saw voters agree by a slender 50.3 per cent margin to support curbs. Exact details of how any curbs will work have to be worked out over the next three years. Already, Credit Suisse, the second-biggest Swiss bank, says it fears a blow to GDP growth, investment and employment.

At the Swiss Bankers Association, the organisation representing over 300 banks in the country, the vote was dubbed “regrettable”, although it had to be accepted in a democratic process.

“The result has to be explained duly to the European Union now, and at the same time, a sensible solution has to be found to implement contingents in a non-bureaucratic way,” the SBA said in a statement emailed to this publication when contacted about its views.

“The EU is the most important foreign market for banks in Switzerland. The SBA advocates for more growth and an improved access to this market. It is very important that the phase of political uncertainty remains short, in order to avoid long-lasting negative effects on welfare in Switzerland,” the SBA, which recently set out its views on broader regulatory issues to this publication, said. (For more on that interview in Zurich, see here.)

A particular worry is that about 25 per cent of Swiss banks’ staff come from the EU, the organisation said. “The SBA fears that the available pool of trained staff will decrease now; it could become harder for banks to supply their needs for well-trained staff. Additionally, new contingent requirements could introduce even further bureaucratic hurdles,” it added.
Xavier Isaac, Head of Salamanca Group Trust & Fiduciary, who is based in Geneva, said: “It is a three-year window during which we need to adapt legislation…a lot of water can flow under the bridge. I am not too concerned about it. It is a bit of a shock from a perception point of view. We will still be able to attract talent to Geneva.”

Credit Suisse has warned that the country's economy could see a cut in GDP growth over the next three years as firms cancel, or cut, investment projects. The move could even hurt the value of the Swiss franc, it has said.
Cantons near Geneva and Zurich, where most financial services are located, voted against the referendum proposal; those in more rural parts of the country voted in favour. The vote seeks to overturn an arrangement in place since the start of the Noughties in which EU nationals, so long as they had a job, could be resident in Switzerland. The vote has already prompted complaints from EU officials. Private banker reaction
At the Association of Swiss Private Banks, which represents 10 member banks representing 6,000 staff worldwide, it said uncertainty about the consequence of the vote was a concern. It did, however, point out that the Swiss political system had its advantages by getting such issues into the open at a relatively early stage.

“At the moment, we have more questions than answers as far as the relations between Switzerland and the EU are concerned,” Michel Dérobert, director at the Geneva-headquartered association, told this publication.

“For the economy, uncertainty is always a bad thing. This is also true for the banking sector. If the immigration issue cannot be solved in a good way (which is still perfectly possible but by no means certain), I expect Switzerland as a financial centre to become less attractive,” he said.

“The [Swiss] Federal Council will have a tough job pleasing at the same time our European partners and the Swiss population (which, in this country, is called the Sovereign for a reason). But our government is used to dealing with this kind of problem. Swiss institutions are made in such a way that big problems must appear at the surface earlier than elsewhere. They must be dealt with, whether it pleases the government or not. Here again, we are used to it and, on the long run, it usually helps to avoid even bigger problems,” he said.

And Dérobert concluded, with a dig at the EU bloc: “I am not sure that our European partners will be grateful for the reminder that the people can have a real say on immigration issues, but there it is.”

Members of the ASPB include Bordier & Cie, Gonet & Cie; La Roche 1787; Banque Pictet & Cie, and Bank Lombard Odier & Co Ltd.

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