FINANCIAL SERVICES INDUSTRY IN SWITZERLAND.   Term Paper ID:28047 Click to get this paper

Essay Subject: Background, types of services, major players, risks, Swiss bank accounts, Swiss economy.... More...

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Paper Abstract: Background, types of services, major players, risks, Swiss bank accounts, Swiss economy. Paper Introduction: FINANCIAL SERVICES INDUSTRY SWITZERLAND Introduction This research examines the financial services industry in Switzerland. Background information is provided delineating the types of financial services that are widely available in Switzerland, as well as the types of financial services companies that are found in that country. Major players in the financial services industry in Switzerland also are identified. The regulatory system and the functioning of the Swiss financial services industry is reviewed. This discussion also includes comments concerning the types and magnitude of risk confronting Swiss financial services institutions. Background Information: Types of Financial Services Available and Types of Financial Services Companies Present Financia Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. In this context, off-shore banking activities may frustrateboth national and international economic planning and goal attainment. Summary and Conclusion This research examined the financial services industry in Switzerland. Waadt Versicherungen Holding operates asubsidiary that specializes in life insurance in Switzerland, Italy,Belgium, Liechtenstein, and Spain. Credit Suisse has 417offices worldwide, of which 3 1 are located in Switzerland. The Swiss National Bank is independent of politicalpressures and is one of the most independent of all central banks. I don't think we have anything toworry about. This discussion also includes comments concerningthe types and magnitude of risk confronting Swiss financial servicesinstitutions. The Swiss economy is market directed and privately owned. Julius Baer Holding, one of themost important of this group of financial institutions in Switzerland, ownsfirms that engage in the full spectrum of brokerage, asset management, andcurrency trading activities. (1995 Winter). Intershop Holding is a portfolio manager limiting its investments toreal estate holdings. Theregulatory system and the functioning of the Swiss financial servicesindustry is reviewed. Swiss Life Insurance Company is theleading life insurance company in Switzerland, although the company alsosells non-life insurance policies. "We are concerned about the threat to Swiss banking confidentiality but it is difficult to say yet what will happen. It is not only authorities in theUnited States who desire to challenge Swiss banking secrecy laws. Katchen, J. Approximately 8 percentof the capital of Swiss corporations or limited liability companies istraded on the Swiss stock exchanges. Gallische Creditabstalt. Two of the more important regional banks are Bank Linth andSt. Mortgage loans, both urban and rural, are extended by commercial banksin Switzerland. Off-shore banking, however, also provides an environment in which somebanking activities may escape the regulatory authority of nationalgovernments. The Swissgovernment, however, exercises significant control over the generalmanagement of the economy and the country's financial system. World Bank. These voluntary measures havethud far been successful. (1998 July).Switzerland. The country'saverage annual rate of inflation for the 1981-199 period was 3.8 percent.Following a problem with inflation in the early-199 s, inflation inSwitzerland was brought under control in 1994 ("Switzerland," 1994). It is obvious that the advantages of a Swiss bank account are greatestfor those individuals who (1) have a great deal of money for which theyseek maximum security, (2) have a reason to conceal the fact that they havea great deal of money, and (3) have reason to believe that safety forthemselves in their own country is at risk. To avoid minimum pricing laws for imports to the United States, someJapanese firms have used Swiss bank accounts. OECD Economic Outlook, 12 -125. Grossnational product growth averaged 1.9 percent per annum over the 1981-199 period. These banks are called universal banks. Then it would be difficult to find an offshore haven with similar laws to the ones that we would have lost, as the countries offering this are few anyway (p. Withinthis context, most of the foreign competition is for the large universalSwiss banks, as it this area of activity that the foreign financialservices companies are most anxious to enter. Unigestion Holdingsmanages industrial asset portfolios, as well as services in hedging andcurrency exchange. Major playersin the financial services industry in Switzerland also are identified. The most important commercial banks in Switzerland are the generalcredit business banks. Many of theseinstitutions also engage in foreign currency trading and comparablefinancial services. BB Biotech, as its name implies, acts as a holding company forinvestments in the biotechnological sector. While the universal banks offer private banking services, there alsoare private banks that offer nothing but private banking services. An economic analysis ofMatsushita revisited. A. Crettol, V. Among the insurance companies in the Swiss financial sector, Baloise-Holding sells both life and non-life policies. Switzerland, however, is one of the world's most important financialcenters. (1997 July 31). It provides an environment inwhich the amount, source, ownership, and location of funds may be shieldedfrom official scrutiny. At the top of the commercial banking hierarchy in Switzerland are theuniversal banks that offer a full range of financial services throughoutthe country. Geneva, Switzerland: Union deBanques Suisses. Societe Internationale Pirelli is a financial holdingcompany that is a member of the Pirelli Group, which is the largestmanufacturer of automobile tires and cables in the world. (1996 Summer). Castle AlternativeInvest managed investments in hedge funds. Switzerland's GNP approximates US$22 billion per annum. Bondpartners, among the brokerage specialist in the Swiss financialservices sector, specializes in the Euro-dollar market. Other important institutions in this group are Coop Bank, which is amedium-sized universal bank, and Vontobel Holding. Cantonal banks are so called because they are owned by thecantons. The Swiss National Bank andseignorage. The Swiss National Bank, created in 19 7, has the freedom to managethe money supply at its own discretion in accordance with its primaryobjectives of stabilizing prices, protecting the value of the Swiss franc,and promoting economic growth in Switzerland (Metzler & Meier, 1991). 33). The use of off-shore banking for this purpose isgenerally referred to as money laundering (Trepp, 1997). BBMedtech, a sister company, restricts its portfolios to medical technologycompanies. This law, according to Trepp (1997) was ...perverted after the war to protect banks from the claims of accounts holders and relatives of those killed in the Holocaust. Switzerland has an active securities market. Economicpower in Switzerland is shared by major industrial enterprises, majorfinancial institutions, and the Swiss federal government representing theinterests of other economic entities and the Swiss population as a whole.Economic power in Switzerland, thus, is well distributed throughout thesociety (OECD, 1998). The Swiss government has absolute authority to make fiscal policy(Simmons, 1996). For a variety of reasons-bankingsecrecy protected by statute, neutrality in two world wars-Switzerland hasattracted depositors who want a readily available depository outside theirown frontier and in a currency other than that of their own country. Thisinternational desire to place deposits in Swiss banks frequently posessubstantial problems for Swiss domestic banking and credit, for Switzerlandhas no apparatus to neutralize the effects of the inflow of foreign funds.While the Swiss National Bank avoids outright bans on the inflow of foreignmoney, the Bank, at times, does ask commercial banks to discourage furtherinflows by paying no interest on foreign deposits or even by levying asmall charge on increases in such deposits. Background information was provided delineating the types of financialservices that are widely available in Switzerland, as well as the types offinancial services companies that are found in that country. Switzerland has the world's highest percapita gross national product-US$29,8 (World Bank, 1999). According to Trepp (33): More concern is felt at Credit Suisse, however, where a spokeswoman acknowledged that the threat of change is considerable. Some of these companiesspecialize in a particular form of insurance, while others sell multiplelines of insurance. World development report 1999. Background information is provided delineating the types of financialservices that are widely available in Switzerland, as well as the types offinancial services companies that are found in that country. "If the law changes here, it could also change elsewhere," says the spokeswoman at Credit Suisse. While the minimum priceswere adhered to at United States customs, the Japanese firms secretlysought to give substantial rebates to their United States distributors bytransfers to Swiss bank accounts (Belderbos & Holmes, 1995). Swiss banks blown open. Foreign depositors long have been attracted to Swiss banks because ofthe strict secrecy rules that, in accordance with the Swiss Banking Law of1934, made it illegal to provide information about clients without theirexplicit authorization. Although the universal banks, the cantonal banks, and the regionalbanks offer brokerage services, there are financial institutions inSwitzerland who specialize in brokerage services. Switzerland offers as extensive an array of financial services as isto be found anywhere in the world. (1991). The cantonal banks are most active in this type oflending. Monetary policy background to thegold transactions of the Swiss National Bank in the Second World War.Z?rich, Switzerland: Swiss National Bank. The Swiss NationalBank, which started operations in 19 7, is the only banknote-issuinginstitution in the country. In 1934 banking secrecy was enshrined in Swiss federal law, mainly toprotect French tax-evaders from that country's socialist government, andnot, "as legend has it, to protect German Jewish account holders from theNazis" (Trepp, 1997). The last group of major companies operating in the Swiss financialservices sector are the financial asset management companies thatspecialize in specific economic activities, such as biotechnology orconstruction. Vontobel Holding ownssubsidiary banks in Switzerland and around the world to provide universalbanking services. Personalized Swiss banking.http://www.sarasin.ch/d/index.html Belderbos, R., & Holmes, P. References Bank Sarasin & Cie. Background Information: Types of Financial Services Available and Types of Financial Services Companies Present Financial services in Switzerland is far more than the legendary"Swiss banking." Nevertheless, private banking in Switzerland is animportant components of the Swiss financial services industry. The United States is continually pressing Switzerland to relax itsbanking secrecy laws. Similar confidentiality is offered in a small number of other countries, making it difficult for these banks to move offshore if the changes are introduced. StilhalterVision managed investment portfolios in large listed European companies,including Intershop in this group of financial services companies, USBamong the large universal banks in Switzerland, and Nestle. In 1937, the capital inflows from foreign depositors were sostrong that the Swiss National Bank was forced to reconsider the principleof free convertibility of the Swiss franc through a flexible rate exchangesystem (Crettol & Halbeisen, 1999). 33). The discount rate is used by the Swiss NationalBank as a signal to the Swiss public of its desires. Valiant Holding owns three banks in Switzerland whoseprimary lines of business are securities trading and commercial loans.Zurich Allied is a financial holding company specializing in financialservices portfolios. Off-shore banking often facilitates internationaloperations. Among the financial services companies that specialize in assetmanagement in specific areas of economic activity, Asselas Asset Selectionlimits their investments to medium-sized companies in any field of economicactivity. The Bank is completely separate from the federal Ministry ofFinance. Again, most of these investments are in American medicaltechnology companies. Lausanne, Switzerland: University of Lausanne. People are confusing a special situation-concerning dormantaccounts-with age-old laws which are proven to work well" (Quote in Trepp,1997, p. An ever increasing number offinancial services companies from Continental Europe, the United Kingdom,North America, and Japan are seeking entry into the Swiss market because ofthe global reach of financial services companies in Switzerland. Withrespect to personal banking, Switzerland is a part of the so-called off-shore banking community as a consequence of the country's banking secrecylaws. Regulation does not constitute an important risk for Swiss financialservices companies. The difficulty Swiss banks face is that secrecy laws are one of the prime attractions for customers looking to keep their business transactions under wraps" (p. (1999). Simmons, B. The stated motivations of the United states are tocatch tax cheats and money launderers. Schweizerische Rueckversicherungs is the world's largestreinsurance company for both life and non-life policies. Maag Holding is a mechanical engineering holdingcompany that also has manufacturing subsidiaries. Euromoney, (3 5), B64-B65. Foreigndeposits equal more than half the national income and are larger at timesof international political crisis or general currency uncertainty. Abandoning their private banking income could prove costly, however, with 4 per cent of the return on equity of Swiss banks in 1996 coming from this source. London: OxfordUniversity Press. Organization for Economic Cooperation and Development. The company'soperations are global in scope. The Financial Regulatory System in Switzerland, Functioning of the Financial Services Industry, and Major Risks Confronting Players in the Financial Services Industry The general environment within which the Swiss financial servicesindustry functions is highly stable. Theprosecutor in the tax bribery trial involving some of Italy's more wellknown fashion designers, as well as some of Italy's public servants.pressed Swiss authorities to reveal the details of bank accounts inLiechtenstein and Gibraltar, where Italian tax police allegedly stashedbribes they exacted from the fashion firms. There is nothing mysterious abouteither the conduct of such business, nor about the reasons for making useof off-shore banking. (1996). It is controlled by the federal authoritiesbut has the full authority of law to act independently of the government inthe development and administration of monetary policy, including foreignexchange policy. Major Players in the Swiss Financial Services Industry Among the most important players in the financial services sector inSwitzerland is the Bank for International Settlements. The country is exceptionally stableboth politically and socially. Metzler, W., & Meier, I. For 52 years the banks had to be forced from the outside to do something to identify the rightful owners of dormant accounts: in 1962 by the Swiss parliament; and in 1996 by international pressure. Switzerland has a banking outlet for approximately each 1,1 residents. Rulers of the game: Central bankindependence. The cantonal banks play important roles in the Swiss financialservices environment. Of these general credit business banks, the mostimportant are USB (the amalgamation of Schweizerischer Bankverein [SwissBank Corporation] and the Union Bank of Switzerland), the Credit Suisse(Swiss Credit Bank), the Union des Banques Suisses (Union Bank ofSwitzerland), the Banque Populaire Suisse, and Bank Leu. EUI, 1-15. The divergent responses to global andEuropean forces. Right now nothing has been eroded, but there is the possibility that this could change," ... European, 32-34. This bank wasfounded in 193 and is, in effect, the central bank for all of the centralbanks in the world. USB, which was created in 1998 in the merger mentioned above, now isamong the largest asset managing banks worldwide. Warteck Investspecializes in the management of investment properties-primarilyresidential rentals and leisure properties. Off-shore banking is the term applied to the conduct of commercialbanking business in a country other than the home country of the individualor organization conducting the business. Financial Services Industry Switzerland Introduction This research examines the financial services industry in Switzerland. There are two interrelated banking networks: the stateregulated system, which includes the Swiss National Bank and the cantonal(provincial) banks; and the private banking system. Flughafen-Immobilirn-Gesekkschaft Fig specializes infinancing the construction of airports and airport buildings. The additional worry for Swiss banks is that if the secrecy laws are removed, there are few opportunities to move their private banking divisions offshore. Von Ungern-Sternberg, T. Economic growth was minimal in the early-199 s; however, strongergrowth began in the last-half of 1994, and this growth trend is expected tocontinue throughout the last-half of the 199 s and into the early-2 s(OECD, 1998). TheSwiss National Bank earns substantial sums through seignorage (Von Ungern-Sternberg, 1996). (1999). Regional banks provide financial services similar to those providedby the cantonal banks, also in limited regional areas. BTT T Telekommunikations und Tech, as its name implies, limits itsholding company investments to companies operating in the general field oftelecommunications. Off-shore banking, in some instances, also facilitates abuses of theinternational commercial banking systems. Pressure from foreign governments resulted inordinances that allow for confidentiality to be lifted when depositors areunder investigation for currency crimes such as money laundering or insidertrading. Swiss banks now have to decide whether to abandon offshore banking or whether to move the business elsewhere. These companies do, however, face risks in the form offoreign competition within Switzerland. In Switzerland, an officer at USB (one of Switzerland's major banks),said that: "Various politicians have tried to crack down on banking secrecyin the past and not been successful. (1998 Spring). (1999). These companies are important because the providespecialized capital sources for companies in particular fields of economicactivity. International Organization, 5 (3), 1-25.http://www.mtholyoke.edu/acad/intrea/simmons.htm Switzerland. For most people, there is noadvantage to a private Swiss bank account unless one is Swiss. Major playersin the financial services industry in Switzerland also were identified.The regulatory system and the functioning of the Swiss financial servicesindustry was reviewed. The differencebetween the two groups of banks are that the cantonal banks are owned bythe cantons, while the regional banks are privately owned. Gas Visionis a holding company for companies engaged in the production anddistribution of industrial gases. 33). (1994 September). Switzerland: EC market- aspects ofeconomic policy against independent strategy. & Halbeisen, P. It is primarily through this bank that obligationsbetween central banks around the world are settled. The Societe de Participations Financieres isan investment trust specializing in real estate portfolio management.Sustainable Performance Group is a portfolio management company similar inmost respect to what American know as mutual funds. Its banking system is much larger than is necessary for domestictransactions. The criterion for Asselas is the size of the company in which itinvests. Trepp, G. It issues the Swiss franc (Sfr), one of theworld's leading currencies. Antitrust Bulletin, 4 , 825-857. Pargesa Holding limitsits investment portfolios to larger firms, including financial servicesinstitutions. This discussion also included comments concerningthe types and magnitude of risk confronting Swiss financial servicesinstitutions. Further, most of theseinvestments are in the biotechnological sector in the United States. Switzerland is the principal international banker for individualsseeking a safe haven for their money. Thesebanks tend to focus on international clients. Two of the more important private banks that tend tofocus on international clients are Bank Sarasin & Cie and BANQUE PriveeEdmond de Rothschild. The country is a global financialpowerhouse. Swiss banks are able to offer a full scope of financial services.Unlike in the United States since the 193 s, there have been norestrictions on the selling securities and insurance in Swiss commercialbanks. While such restrictions have been modified recently in the UnitedStates, the financial services environment in the United States remainsmore restrictive than that in Switzerland (Bank Sarasin & Cie, 1999). Another important group of financial institutions operating inSwitzerland are the insurance companies. Generali Holding's primarysubsidiary is Schweizer Union, a company that specializes in non-lifeinsurance, especially health insurance and automobile insurance.Schweizerische National Versicherung sells both line and non-life insurancepolicies. Harwanne Cie de Participations Industry& Finance is a financial holding company for companies engaged in theproduction of various types of metal products, open-cast mining, electroniccomponents manufacture, and real estate development, as well as firmsengaged in financial services. While that proportion isapproximately the same at in the United Kingdom, it is four times as highas that in next door Germany (Katchen, 1998). This is aachievement, considering the disproportion in the relatively small size ofthe Swiss economy and the relatively magnitude of foreign funds. The banks are Banque Cantonale de Geneve, BanqueCantonale du Jura, Banque Cantonale Vaudoise, BaselkabdschaftlicheKantolalbank, Basler Knatonalbank, Graubuendner Kantonalbank, and ZugerKantonakbank. The cantonal banks, which tend to emphasize mortgage lending, alsoprovide a full range of financial services within their cantonal serviceareas. TheSwiss National Bank has absolute authority in matters of monetaryauthority, including making foreign exchange rate policy for the Swissfranc. These companies frequently are a hybrid between investment trustand venture capitalist. These large banksprovide a comprehensive scope of financial services. At times, it may provide access to lower cost money than wouldotherwise be available (OECD, 1998). If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.