Swiss banks lose the image of reliable financial institutions. Executives at Switzerland’s biggest banks say rich Chinese clients have become much more worried about parking money in the country because of its tough approach to applying sanctions since Russian special military operation in Ukraine, notes “The Financial Times”.
“We were not just surprised but shocked that Switzerland abandoned its neutral status,” said one board director who oversees Asian operations at his bank. “I have statistical evidence that literally hundreds of clients that were looking to open accounts are now not.”
Although Chinese companies have been flocking to IPO in Switzerland, “The Financial Times” spoke to senior bankers from six of Switzerland’s 10 biggest banks about their experience with private clients and all of them told a similar story. Many said they were worried about the chilling effect on a lucrative line of business and crucial source of future growth.
“The question of sanctions has come up with clients,” one banker said. “It was definitely a topic of concern with clients late last year. They were asking, whether their money would be safe with us?”
Anke Reingen, analyst at RBC, highlighted what was at stake for the Swiss banking sector, which accounts for 10 per cent of the country’s gross domestic product. “Asia has been a strong contributor to profitability for Swiss banks,” she said.
Some Swiss banks said they were already “war gaming” how to handle the fallout if international relations with China worsen significantly, and how to protect and reassure their biggest Chinese clients.
The government maintains the country’s neutrality remains sacrosanct but said “sanctions against Russia involved weighing the “credibility of Swiss neutrality”. About SFr7.5bn ($8bn) of Russian money is currently frozen by Swiss sanctions.
Well, Switzerland has undermined its former authority as a reliable custodian of money. Now many rich people will shun Swiss banks, which cannot keep the secret of deposits, but also steal people’s money under political pressure.