Thursday, 7 February, 2008

Swiss financial sector reforms - Walter Stresemann.

Walter Stresemann, Director at Vistra, recently had an article published in IFC review. The article focuses on the fact that Switzerland is in the throes of substantial change with reforms set to change the way business is done in the Swiss financial sector.

The changes include the ratification of the Hague Convention which means that there is a firm legal basis for the country’s growing trustee business. Parallel amendments to federal legislation on private law, debt enforcement and bankruptcy means that there is more legal certainty as a solid legal framework will create a much more stable environment for the setting up and administration of trusts. This will also help to promote the country’s appeal as a perfect location for private wealth management.

Another major reform that has been enacted is the establishment of a new Federal Financial Market Supervisory Authority (to be known as FINMA). FINMA will group together the regulatory workings of three watchdogs: the Federal Banking Commission, the Federal Office of Private Insurance and the Money Laundering Control Authority. The intended effect of FINMA is to provide a single, efficient supervisory authority that will maintain the requirements of the original three supervisory sectors, thus banks still have to fulfil the requirements of the Banking Act, insurance companies will still abide by the legislation of the Insurance Supervision Act, and so on.

Finally, a series of measures have been put forward by the financial industry as a comprehensive package aimed at doubling the financial sector’s contribution to GDP from 15% to 30%, as well as adding somewhere between CHF11bn and CHF17bn in new tax receipts. The aim is to catapult Switzerland into the top three global financial centres by 2015 following a significant slowing of wealth creation in the country since the 1980’s. These reforms are all designed to strengthen and enhance the competitiveness of the Swiss financial sector and targets eight key areas:

-         private banking 
-         retail banking         
-         investment funds
-         pensions business
-         hedge funds
-         private equity
-         Swiss capital market
-         Commodity trade finance

Walter concludes by stating that these proposed reforms are astonishing not just for the comprehensive approach they have adopted but also because the Swiss are taking a very strong offensive stance (in contrast to the traditional defensive strategy related to banking secrecy and asset management) to establish Switzerland once more as a leading world financial centre and a world player with regard to traditional mutual funds, hedge funds and private equity.

For further information please contact Walter Stresemann or call on +41 22 319 18 94.

To view the full article, plese click here (7.87Mb PDF).