Swiss Wealth Industry Helps Banks To Fund Economy, Report Says
(Bloomberg) — Switzerland’s massive financial industry generates economic benefits that include cheaper corporate loans, as cross-border wealth inflows lower bank funding costs, according to Oliver Wyman.
“Wealth management not only generates significant economic value added through the management of client assets, but also plays a crucial role for lending activities by providing funding through client deposits,” Oliver Wyman said in a new report published on Friday.
The study, commissioned by the Swiss Banking Association, addresses the significance of the financial-services sector to the economy amid the heightened scrutiny since the collapse of Credit Suisse. Even after abandoning its banking secrecy rules more than a decade ago, Switzerland is still the biggest hub for cross-border wealth, managing about $2.7 trillion of assets.
The financial sector added 74 billion francs ($90 billion), or 9%, to the national economy in 2024, according to the report, with banking services making up 57% of that total. Financial institutions contributed 21 billion francs of tax revenues, or 13% of the country’s total.
Despite concerns over the size of UBS Group AG’s balance sheet since its takeover of Credit Suisse, the Oliver Wyman report highlights the economic contribution of banking.
Banks employ about 158,000 people in Switzerland, with each of those jobs supporting another position within the economy, according to the study.
The report’s publication comes at a time of growing anti-bank sentiment in the Alpine nation. Lawmakers are debating a motion to limit bankers’ pay, with the compensation of UBS Chief Executive Officer Sergio Ermotti — Europe’s best-paid bank boss — coming under scrutiny.
UBS itself is also in the crosshairs, as the Swiss government and regulator Finma push for tougher capital requirements at the bank. Finma is pressing UBS to fully deduct the value of its foreign subsidiaries from the capital of the parent bank, a step officials deem as necessary to prevent a repeat of the 2023 collapse of Credit Suisse.
UBS says the plan as an unfair overreaction, after it stepped in to rescue its former arch rival. The bank is even examining the potential relocation of its headquarters if Switzerland sticks to its demand that the bank hold an extra $25 billion in capital, Bloomberg News has reported.
The dispute has sparked a debate in Switzerland about the economic relevance of the bank, which mainly focuses on wealth management.
UBS has stepped up its lobbying efforts as the capital proposal makes its way into Swiss parliament this summer.
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