«What’s the Difference Between an American and a Swiss Bank?»

Alfred Mettler

Alfred Mettler

Banking shares have been badly hit by the turmoil on the financial markets – with Credit Suisse bearing the brunt. There’s no shortage of explanations for this. But perhaps it was a simple question of the bank carrying the wrong name in the past? Alfred Mettler, a Swiss professor in finance in the U.S. is addressing the question for finews.first.

finews.first is a forum for renowned authors specialized on economic and financial topics. The texts will be published both in German and English. The contributions appear in cooperation with Pictet, the Geneva-based private bank. The publishers of finews.ch are responsible for the selection. Previous contributions: Rudi BogniAdriano B. Lucatelli, Peter Kurer, Oliver Berger, Rolf Banz, Dieter Ruloff, Samuel Gerber, Werner Vogt, Claude Baumann, Walter Wittmann and Albert Steck.

The share price of Credit Suisse tanked in recent months. Analysts have given their explanations for the phenomenon. The media and society immediately named several culprits: The investment bank, the company's strategy/outlook, its Board of Directors, the ex-CEO Brady Dougan, the Chairman of the Board, Urs Rohner, as well as the U.S. Justice Department. Even Tidjane Thiam, who has only been CEO for about half a year, was questioned.

But in retrospect, rather than focusing on these culprits, was it not actually the name that was at fault? Instead of Credit Suisse, shouldn’t the company have named itself just «Credit», or «Credit Anglo-Saxon» in order to better characterize itself? Which begs the question, where does the «Suisse» part of any name still play a role?

In Switzerland we are – rightly – proud of our economy, which consists of both internationally focused mid-market firms, as well as globally successful corporations.

«More likely, differences are found in a bank’s organization, culture and social outlook»

Most Swiss companies are able to artfully strike a balance between the «global» and «local» aspects of the company culture, with internationally-driven management coupled with a sense of Swiss stability and reliability. The opportunity to be employed in a Swiss working environment is thus equally attractive to both employees and customers.

But the line becomes blurred with larger banks and multinational organizations, such as Credit Suisse. Are they Swiss, or Anglo-Saxon? And what differentiates a Swiss Bank from an Anglo-Saxon or American one?

Operationally, there aren’t many differences, given that banking is fundamentally similar throughout the world. More likely, differences are found in a bank’s organization, culture and social outlook.

The American mentalities of «Entrepreneurial Spirit» and «Risk Taking», combined with their focus on short-term profitability and an «every man (or woman) for themselves» attitude, are known foundations for a successful investment bank.

Similarly, the U.S. is a great country for trading-focused firms – largely due to its size and number of scalable, larger financial institutions. As checklists, standardization, value chains, delegation to subordinates and constant reorganization have become an accepted aspect of the culture, not much room is left for either individual or overarching perspectives.

«So how does one know when a Swiss Bank has become an Anglo-Saxon bank?»

Historically, Swiss Banks have not been structured like this. Holistic, long-term oriented, and client-centric at their forefront, they have always been much more suited for areas like wealth and asset management, or retail banking. Likewise, they are less adept at the «riskier» side of banking – investment and trading, which benefit from a degree of American adaptability and flexibility.

So how does one know when a Swiss Bank has become an Anglo-Saxon bank? Having an American CEO is not enough to mark the distinction; neither is having several American board members.

There are in fact, several wider-ranging indications of a bank having become «Anglo-Saxon» which likely begins when the institution experiences constant reorganizations together with high turnover rates. (Many American leaders will begin their tenure by changing the preexisting organizational structure and bringing their «own people» on board).

Other signs may include:

  • When the institution begins to evaluate employees for promotion based on their command of the English language, rather than their performance capabilities.
  • When team leaders are located in different parts of the world and a team remains confused about its leader’s exact role and responsibilities.
  • When the company schedules an increased amount of meetings, with constantly changing team members, which leads to disorganization and forces the team to start over again.
  • When discussions during meetings are held in English, and a reasonable argument presented in distinctly «Swiss» English stands little to no chance against quick and fast-paced «American English».

But what is the surest sign that a Swiss Bank has become Anglo-Saxon? When the highest person in HR only speaks English, gives no indication of any interest or knowledge of the Swiss culture and language, leaving uncertainty with employees about how the position was filled.

So does this mean it’s problematic for a larger Swiss Bank to be culturally Anglo-Saxon? In theory, no, but one needs to be aware of the distinctions between the two types of banks. Traditional «Swiss Banking», unlike investment banking, is difficult to accomplish with an Anglo-Saxon mindset.

Ultimately, it comes down to one deciding which package they are looking for. The Swiss banking model demonstrates characteristics including reliability, dependability, perfectionism, stability, longevity, modesty, discretion and tolerance.

«As a society, we may need to better examine who truly contributes value and how much»

Thus the Swiss package remains predestined for success in many areas of finance and banking. However, if one wants to truly retain the Swiss model in their bank, higher executives must be culturally and socially aligned with said model. At UBS, leadership seems to have recognized this some time ago, whereas at Credit Suisse, it seems as if the Anglo-Saxon element has been (too) dominant for (too) much time.

In the last several years, Switzerland has become a magnet for international employees, and the country remains – despite recent voting – proud of its reputation as an open and pluralistic society. Unfortunately, some people still look at immigration with a critical eye and expats do not always have the easiest time integrating themselves into the Swiss society.

One regularly hears critical opinions against certain countries of origin. But as a society, we may need to better examine who truly contributes value and how much. Three examples are listed below, not intended for generalization.

  • First, a Portuguese or Spanish student moves to Switzerland. He or she learns the language, finishes his or her studies and completes a degree, finds a job, and works his or her way up in the professional world.
  • Second: A German medical doctor begins his or her role in a Swiss hospital. He or she is well-educated and provides essential and necessary services to Swiss citizens.
  • Third: An American «college» graduate is hired in Switzerland, based off of his or her degree. Despite the American education and university system being much different and less standardized than that of Switzerland (read: not all American college degrees are equally impressive), both society and HR departments portray this candidate as a «Hochschul-Absolvent», on par with the most well-educated Swiss university graduates.

As a result of his or her command of the English language, the graduate begins working at an international company in Switzerland, while harboring little to no ambitions of integrating him or herself within Swiss society or culture, or learning any of the Swiss languages.

Alfred Mettler is Professor of Finance at Georgia State University (Atlanta, USA) and Swiss Finance Institute Adjunct Professor.

He grew up in Switzerland and was a faculty member of the Swiss Banking Institute at the University of Zurich before moving to the U.S. in 1998. His principal academic interests are in International Banking and Finance, Risk Management of Financial Institutions, the Global Financial Architecture, and Financial Education. He has leading roles in several Executive Education Programs in Europe and the U.S. and has consulted for various companies and organizations.

In a broader context, Mettler often comments on financial, economic, political, and societal developments in the U.S., Switzerland, and Europe. He regularly gives public speeches and presentations, and he is a frequent contributor to the Swiss and the U.S. media. Together with his wife he is currently working on a book about the USA.

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