Business in Switzerland – Banking Systems

Due to the old traditions of professionalism and despite the last obstacles brought about by Covid19, the banking sector in Switzerland has saved its attractiveness for any investor. The best professional standards have always been the key elements in everything concerning business. The tradition of professional attitude allowed the country to make a successful reinvestment in itself, protecting its own top financial reputation and proceeding to hold the leading positions in the world in banking and finances.

Business in Switzerland has always been eager to engage workforce from abroad despite a solid number of qualified staff in the country. Almost a quarter of the personnel in Switzerland consists of foreign professionals and in Zurich they comprise about a third part from the whole amount of specialists. Knowledge of the main local languages (French and German) is not compulsory for a successful career. Of course, knowing the local language is always beneficial but the English language as an international means of communication will do perfectly since most enterprises use it while performing their business.

Expatriates are often surprised when they understand how easy the process of settlement is in the country. They may start their work immediately upon arrival with minimum time-consuming bureaucracy.

Switzerland is considered to be an outstanding country as far as banking is concerned. It is one of the top banking and financial centers in the world. The financial network is very advanced and all banks in Switzerland hold a leading position in terms of consumer banking and assets management. The overall amount of assets in the banking system is almost seven trillion Swiss francs taking into account those assets that are managed by local banks abroad. The involvement of foreign legal entities is crucial for the prosperity of the financial services trade. The banking environment in the country is diversified consisting of universal, private, and cantonal banks.

Swiss National Bank (SNB) administers monetary management acting as an independent and central bank. One of the SNB’s top objectives is to guarantee the stability of prices while taking into consideration economic advancement. SNB guides and executes credit and monetary policy. It has the monopoly right for the issuance and withdrawal of banknotes and coins. One of its activities is to perform the functions of a clearing institution assigned for inter-bank transfers. Moreover, SNB and the Principality of Liechtenstein arranged the implementation of Swiss francs as Liechtenstein’s currency at the same time providing the clearance of Liechtenstein’s transactions.

The Council of SNB with its eleven members maintains supervision and exercises control over business operations performed by SNB. The Federal Council with the president of the Confederation appoints six members of the SNB Council together with the SNB president including the vice president. The rest of the five members of the Council are appointed by SNB shareholders. The Governing Board acts as the SNB’s body of managing and executive power. It is responsible for monetary management, the strategy of permanent investment, and international monetary cooldown. The Enlarged Governing Board performs operational and strategic management.

The Government maintains supervision of banks, stock markets, security dealers, insurance companies, and the rest of the financial intermediaries by means of the Financial Market Supervisory Authority (FINMA). It was established in 2009 in the process of amalgamation of the Swiss Federal Banking Commission (SFBC), the Federal Office of Private Insurance (FOPI), and the Anti-Money Laundering Control Authority. The primary objective of this institution is the protection of insured individuals, investors, and creditors. Another aim is to guarantee safe operations of the financial markets in compliance with relevant legislation. These measures make Switzerland the top financial center in the world. All those who offer their financial services in the country are obliged to follow the provisions of criminal law on money structuring.

Such provisions as the FINMA Anti-Money Laundering Ordinance and the Anti-Money Laundering Act ensure the solid legal environment implemented for anti-money laundering and enhancement of due diligence commitments that must be performed by banks and the rest of financial institutions.

Further, we will review the main establishments of the financial sector in Switzerland – Credit Suisse and UBS AG. These two players comprise about 50% of all assets within all Swiss banks and practice all kinds of banking business.

Investment and Commercial banks

Commercial banks are known as multipurpose banks. Except for traditional commercial loans, they practice mortgage investments that take an essential part in banking operations. Consumer lending establishments provide small loans to individuals and industries. Three million customers use the Post Finance card service. Post Finance provides services for investments, payments, mortgages, savings, loans, and retirement planning. This financial sector comprises about CHF 110 billion.

Cantonal banks are banks with a statutory basis that fall within the jurisdiction of the local cantonal law. The canton shares at least one-third of such bank’s capital and has voting rights. This type of bank practice is used for all banking industries focusing mostly on deposits and credits.

The Raiffeisen Group includes associated and independent banks with solid local histories and backgrounds. It has become the 3rd largest banking group in the country. Almost four million Swiss nationals are the customers of the Raiffeisen Group, and almost two million of them are its shareholders.

Private banks comprise limited partnerships, collectives, and privately operated companies. They put emphasis on asset management mainly for individual customers.

There are almost one hundred foreign banks in Switzerland. Most part of their shareholders lives abroad. Nevertheless, every foreign bank comes under the same laws, rules, and supervision as those banks that have the majority of their shareholders being the citizens of Switzerland.

The SIX Group with its subsidiary the SIX Interbank Clearing maintains the SIC and euroSIC interbank payments systems. All financial establishments take advantage of this system performing cashless transfers in CHF and euros among them. The Swiss National Bank vested the SIC system with powers to perform interbank payments. Together with the Swiss Euro Clearing Bank, the SIX Interbank Clearing performs transactions of euro payments via the euroSIC system. These systems allow easy and quick access to international and local payment traffic. The SIX Group was established due to the amalgamation of the SIS Group, Telekurs Group, and SWX Group at the end of the 20th century.