Geneva, Switzerland (GenevaLunch) – Swiss banks take four out of the 10 top slots in Euromoney’s annual ranking of international private wealth managers, published 8 February. The number one place this year goes to Credit Suisse, which bumped UBS out of the place it has held since the rankings were created in 1994. UBS is now third, with HSBC remaining in second place. Zurich’s Bank Julius Baer is seventh and Geneva’s Pictet is tenth. The list is created by combining performance figures with nominations; more than 1,800 nominations were received this year.

Figures published in January 2009 by the Swiss Bankers Association show Switzerland as the global leader in offshore private banking money, with 27 percent of the world market. Other top players, such as the US and the UK, continue to lag well behind.

The news that Swiss banks are still pulling in large amounts of private wealth comes on the heels of several media reports in recent days that suggest Swiss banking has taken a severe battering. The Wall Street Journal (WSJ) 31 January wrote of a “renewed assault” on Swiss banks, once it became clear that Germany was likely to buy bank client data stolen from a Swiss bank.

But the US newspaper a week later wrote that the “gloom on Swiss banks looks overdone”, saying that Germany’s threats are legally dubious and most likely designed a “ruse” to frighten clients. This plus the US-bank UBS court case in 2009 “must be seen in perspective.

“While UBS has suffered CHF56 billion of outflows of client money from its Swiss bank and wealth-management divisions since the US scandal broke, this amounts to a manageable 6 percent of assets under management. Julius Baer this week reported a 4 percent rise in inflows in 2009. And Credit Suisse hasn’t had a quarter of outflows since the start of the financial crisis. Most of the funds lost by UBS appear to have stayed in Switzerland.”

Wayne State Law (US) professor Wayne Henning writes in a New York Times blog that “While the edifice of secrecy has shown some cracks lately, it is still an open question whether there will be a serious breach in the wall of silence that the Swiss have built around their banking institutions.”

Newsweek goes so far as to entitle an article “The Death of Switzerland”.

The author of the article is British MP (Member of Parliament) Denis MacShane, who once lived in Switzerland. He writes of Swiss banks that “the Swiss people’s self-satisfied myths are rapidly evaporating. Take banking secrecy. The tradition began in the 1930s, when the Swiss sheltered French capital fleeing left-wing governments and then Jewish money escaping the Nazis. The trick was to make it a crime to reveal any details of a Swiss bank’s dealings—even to the Swiss tax man. The country quickly became famous for its no-questions-asked depositories.”

MacShane’s arguments are weakened, however, by article’s several errors, starting with the invention of the cuckoo clock, which is from the Black Forest and not Switzerland, and including the history of bank secrecy, whose tradition dates back to the 17th century, not the 1930s as he suggests. The 1934 law which enshrined banking secrecy as it is known now was in large part in response to depositers fleeing the collapse of their European currencies for the more stable Swiss franc.

Links to other sites: Euromoney on private bank rankings, New York Times blog, Newsweek, “The Death of Switzerland”, WSJ 31 January 2010, WSJ 7 February 2010

You can leave a response, or trackback from your own site.