Switzerland remains a solid location for financial and corporate investments. While the country officially went into recession early in 2009, the Swiss economy has again showed promising signs of recovery. Switzerland has not experienced a severe credit crunch as seen in other parts of the world. The unemployment rate early in 2010 is below four percent and is thus much lower than predicted.
Switzerland hosts, since its formation in 1930, the world’s oldest international financial organisation, the Bank for International Settlement (BIS), which acts as bank for the most important central banks. Switzerland is a member of the Basle Committee on Banking Supervision. Other international organisations such as the International Committee of the Red Cross (ICRC), the United Nations Organisation (UNO) with the largest representation office outside the New York headquarters and other UN organisations, the World Trade Organisation (WTO), the World Intellectual Property Organisation (WIPO) or the World Economic Forum (WEF) are also located in Switzerland, to name a few. On 11 June 2010, the General Assembly of the UNO elected a Swiss as President of the sixty-fifth session of the General Assembly.
Switzerland seems attractive to foreign companies and (ultra) high-net-worth individuals and employees for various reasons, such as free capital flows, open markets including labour market, legal, political and economic stability with an independent and secure currency, high legal certainty, effective protection of social and economic privacy, efficient data protection, pragmatic regulation of the financial services industry, reasonable taxation, excellent educational systems on all levels, availability of skilled employees, top infrastructure and high personal quality of life. Further, the real estate market is robust. Not only more and more finance firms such as hedge fund managers move to Switzerland, but also large industrial US firms that establish their European headquarters, operation centers, research entities or manufacturing or trading sites in Switzerland – like Phillip Morris, Hewlett Packard, Dow Chemicals, Johnson & Johnson, Transocean, Noble Corporation, Google, Sempra Energy, to name a few.
Switzerland is neither a member state of the European Union (EU) nor of the European Economic Area (EEA), but of the European Free Trade Association (EFTA) and Organisation for Economic Co-operation and Development (OECD). This renders Switzerland the autonomy to regulate its financial services industry as it deems appropriate.
Switzerland is one of the world’s leading financial centres. Market surveys show that the Swiss financial market has experienced a veritable boom, not so much due to banking and insurance but mainly due to new financial service providers such as hedge funds, private equity firms, venture-capital firms, independent asset managers, hedge funds or trust companies. There has been no private equity crisis at all in Switzerland.
There are many Swiss financial intermediaries of international weight. Most notably, UBS and Credit Suisse provide not only global asset management but also investment banking services, able to advise large international enterprises on a global scale. Zurich Financial Services and Swiss Re are very strong global (re-)insurers.
Glencore and Mercuria are amongst the world’s leading commodities traders; XStrata is one of the global leading mining enterprises. Switzerland is also a stronghold for pharmaceutical enterprises such as the global players Roche and Novartis, but also for smaller biotech niche players. The country is the home base for large nutrition companies such as Nestlé and hosts Swatch and Rolex and others active in luxury watch manufacturing.
Overall, Swiss banks are in a “comparatively strong” position, not having been badly hit by either the sub-prime crisis or the collapse of Lehman Brothers. The deposit guarantee for Swiss investors was increased from 30,000 Swiss Francs to 100,000 Swiss Francs ($90,000) in December 2008 by the Swiss parliament, which is a clear and meaningful sign to boost business confidence. The insurance comes from the banks themselves, who are required to hold assets in Switzerland that amount to 125 percent of the protected deposits. It’s maybe a typical Swiss solution that, to the extent possible, no taxpayer’s money is involved.
Mark-Oliver Baumgarten is a partner at Swiss business law firm Staiger, Schwald & Partner. He is head of the banking, finance and capital markets team. For more information tel: +41 58 387 80 00; email:
mark-oliver.baumgarten@ssplaw.ch; www.ssplaw.ch
