Secrecy Arrangements and Bank Restructurings keep Switzerland Afloat

The Swiss-UK tax deal was criticized by many as stimulating tax dodging. Above, a caricature of George Osborne, incumbent Chancellor of the Exchquer, is shown.

In August, following the UBS affair, Bern settled two secrecy agreements with UK and Germany. According to the scheme accepted by Germany and UK, income on undeclared accounts will be taxed at mutually agreed rates and the resulting contributions will be made by the concerned Swiss banks. In turn, banks will be allowed to keep their clients’ names secret. Another provision demands German tax authorities to stop buying stolen client data.

The German-Swiss tax agreement has been fiercely opposed by Social Democrats (SPD). Above SPD protesters inciting sanctions for Swiss and Lichtenstein Banks are shown.

However costly and complex it might appear, this scheme, which is about to be implemented with France and Italy, preserves Swiss Banks’ reputation as secrecy heavens. In marketing this will be particularly helpful to attract affluent clients in emerging markets such as Asia and Latin America.

Sergio Ermotti, appointed chief executive of UBS last September, unveiled plans to scale down investment banking and focus on wealth managing.

In synchrony with Bern, UBS and Credit Suisse unveiled their restructuring plans to focus more on wealth managing operations. Their long tradition in private banking and wealth management with Switzerland’s famed bank secrecy is has also dictated important strategical choices. Both are planning to expand in rapidly growing economies. Emerging markets such as Turkey and Brazil offer great opportunities while the Asian, although more palatable, remains more tricky to handle.