UBS’s British chief takes up cudgels for banking secrecy

Luqman Arnold said banking secrecy did not provide protection for criminals Keystone

The new British boss of UBS, Luqman Arnold, has defended Switzerland's banking secrecy laws. Speaking in Zurich, he also said Switzerland had to become more aggressive in marketing itself if it was to retain its position as a leading financial centre.

Addressing the British Swiss Chamber of Commerce on Tuesday, Arnold, who is the first foreign head of a major Swiss bank, said banking secrecy could not be abused by criminals, provided proper legislation was in place.

“Bank client confidentiality does not afford protection for criminals,” he said. “Through international legal assistance agreements, [Switzerland provides] support and information to foreign criminal authorities, as long as the offence is punishable in both Switzerland and the other country.”

He added that Switzerland’s regulations on money laundering were among the toughest in the world and that the United States was looking to base its own rules on existing Swiss legislation.

As part of its drive to combat tax evasion, the European Union wants Switzerland to report interest and dividend income earned by EU citizens. But the Swiss authorities have refused on the grounds that this would violate banking secrecy.

“In Switzerland, we’ve invested a huge amount of energy in preventing bank client confidentiality from being abused,” Arnold told the meeting.

“But at the same time we want to protect the financial privacy of the overwhelming majority of honest bank clients. We do not want to sacrifice this and we do not believe that Switzerland should give into the demands of the EU.”

In what was one of his first public engagements since taking up his post in April, Arnold also focused on Switzerland’s future prospects as a financial centre.

He said the country’s strong economic foundations, along with its advanced infrastructure and its secure regulatory environment had contributed to making it a leading global financial centre.

He said he was confident that Switzerland would continue to maintain its strong position, but he warned that it would have to face up to an increasing competitive environment.

“Over centuries, modesty and a discreet profile have served the Swiss well. However, against a background of aggressive international competition, active engagement on the communication battle field is absolutely essential,” he said.

Arnold also commented on the creation of the new pan-European stock exchange for blue chip shares, which is to be launched next Monday in London.

Called “virt-x”, it was created last year by the merger of Britain’s Tradepoint electronic exchange and the Swiss Exchange’s blue chip segment.

Arnold said the new platform “really extends [the Swiss Stock Exchange’s] reach”, adding that “cross-border transaction costs for trading, clearing and settlement will be significantly lower”.

He also assured the meeting that that UBS’s support of the new platform did not mean that the country’s largest bank was switching allegiance to Britain. The move is a major step for Switzerland, which is the first country to shift trading in its own blue chips to another country.

“UBS is a strong supporter of virt-x, and frankly for us it is not a question of choosing Zurich or London. Rather it’s a question of what we do in London, what we do in Zurich, what we do in New York and other financial centres which have good regulatory environments and significant efficiency.”

by Tom O’Brien