Bankers cautiously optimistic about the future

SBA chairman Mirabaud predicts the extent of future growth for the Swiss banking sector Keystone Archive

Swiss banking officials say the sector appears to have turned the corner after several lean years, predicting moderately improved end of year results.

However, they warn that earnings growth will slow in the second half of 2004 after a run of record profits in the first six months.

“The high point of this year’s global economic rally appears to be past,” said Pierre Mirabaud, chairman of the Swiss Bankers Association (SBA), at Wednesday’s annual media conference in Zurich.

“Rising oil prices and continuing tension in the Middle East have dampened economic optimism, and the Swiss economy cannot uncouple itself from this development.”

However, Mirabaud predicted “moderate” earnings growth for the Swiss banking sector over the year as a whole, adding that staffing levels would probably stabilise at around the 100,000 mark.

He said that while the period 2001-2003 had seen overcapacity followed by reduced staffing levels, a sector-wide survey showed that this trend had ended in 2004.

The SBA chairman added that Swiss banks had already “consolidated” much more than neighbouring European countries during the 1990s, and that the process was now largely complete.

The Swiss banking sector is the largest single branch of the Swiss economy, representing nearly 11 per cent of total economic output – roughly twice as high as in France, Germany or the United States.

First survey

Mirabaud’s comments came during the presentation of a comprehensive, first-ever survey on the short-term prospects for the Swiss banking sector.

The “Banking Barometer”, which was prepared in collaboration with BAK Basel Economics, will be published every September, and aims to summarise prospects for the sector as a whole over the following six months.

SBA chief executive Urs Roth told the conference that Swiss banking leaders had renewed confidence in the future, following the successful conclusion of this year’s second round of bilateral agreements with the European Union.

He said Swiss banks supported the accords on taxation of interest income, fraud and cross-border controls “without any ifs or buts”.

Roth called on Swiss politicians and voters to ensure that they came into force as soon as possible.

“The result as a whole is balanced, the concessions are acceptable, and – something of decisive importance for us – bank customer secrecy stays guaranteed on a long-term basis,” he said.

swissinfo, Chris Lewis in Zurich

In brief

The SBA says the Swiss banking sector is on the up after three years of poor financial results and job losses.

However, it warns that Swiss banks cannot remain unaffected by the current slow-down in the world economy and global stock markets.

While future growth will only be moderate, the number of jobs in the sector is set to stabilise.

Key facts

The Swiss banking sector is the single largest contributor to Swiss GDP.
It accounts for nearly 11 per cent of the total – much higher than in most other countries.
It employs roughly 100,000 people directly, and up to twice as many indirectly.
The SBA estimates that Swiss banks contribute 12 per cent to total national taxation income.