Swiss Banking Between Confidence and Self-Reassurance

Swiss Banking Between Confidence and Self-Reassurance

Private wealth management is by nature a discreet business. That makes the sentiment expressed at the Private Banking Day all the more valuable. In a time of growing international pressure and mounting uncertainty, the event’s focus on «Swissness» can also be interpreted as a clear statement of intent.

Switzerland’s financial center is a global leader in private wealth management – and the country is well-positioned to defend this top ranking. Stability and security are especially valued in turbulent times, and Switzerland holds an additional trump card in the form of a functioning ecosystem: strong expertise, harmonious collaboration within the industry, and a cooperative relationship between private and public actors.

Moreover, the market potential is set to grow in the coming decades, as global private wealth is expected to increase significantly.

That was the underlying positive message of the 9th Private Banking Day, held on Tuesday in Zurich and centered on the theme of «Swissness.» The event was organized by the Association of Swiss Private Banks (VSPB) and the Association of Swiss Asset Management and Wealth Management Banks (VAV).

Three Bank Rescues Are Enough

The highest-ranking guest, Minister of Economic Affairs, Guy Parmelin, called on the large audience to do everything possible to ensure Switzerland’s financial center remains a global leader. This requires the commitment of all stakeholders. But he also struck a thoughtful note, recalling at the beginning of his speech that he had been politically involved in three bank bailouts (Banque Cantonale Vaudoise, UBS, and Credit Suisse) and that he did not wish to go through a fourth.

In his wide-ranging remarks, Parmelin touched on several current issues that, while not directly tied to the wealth management sector, are still relevant. Regarding negotiations with the US over its trade policies, Parmelin expressed hope that initial results could be presented in early July. He also acknowledged that growing international regulatory pressure can lead to a certain loss of identity, and was blunt when it came to the topic of deglobalization: this is nothing less than a «return of protectionism.»

No Industrial Policy

In this context, Parmelin rejected calls for Switzerland to pursue an industrial policy similar to other countries, using government tools such as subsidies and tax breaks to promote selected (often labeled strategic) sectors. He argued that automatic stabilizers, such as unemployment insurance and short-time work compensation, are sufficient.

Unsurprisingly, Daniela Stoffel, State Secretary for International Finance at the Federal Department of Finance and a panelist at the event, shared Parmelin’s stance. However, she hinted that in Bern, there is growing debate about how long Switzerland can cling to its rule-based economic principles in a world where more and more countries are actively propping up key companies and sectors by any means necessary.

Eroding Concept of Neutrality

Stoffel, who described «Swissness» as part of her job description, also weighed in on another contentious issue. Yes, by adopting the EU’s sanctions against Russia, Switzerland had clearly aligned itself with one side – a move that entailed significant costs, including for the banking sector. Still, she insisted (in line with the official position, albeit without great conviction) that Swiss neutrality remains intact.

But back to the core business of wealth management. Giorgio Pradelli, President of the VAV, emphasized the sector’s economic importance: 30,000 employees (nearly two-thirds of whom are based in Switzerland), around 2.4 trillion francs in assets under management, and an «export share» of 60 percent (based on total figures from the member banks of both associations).

Products No One Really Needs

These numbers are comparable to the scale of Switzerland’s watch industry, which is often seen as the very embodiment of Swissness. Fittingly, that industry was represented at the event in the person of Christoph Grainger-Herr. The CEO of IWC delivered a powerful keynote on successful branding for products «that no one really needs,» describing his company as part of the «entertainment industry.» It’s quite possible that more than a few bankers in the audience saw themselves reflected in those remarks.

Such cross-industry gatherings are, by nature, primarily networking events – ideally a source of inspiration, and at present also something of a ritual for collective self-reassurance, rather than a venue for deep debate. Against this backdrop, Grégoire Bordier, President of the VSPB, offered a subtle counterpoint by closing the day with a reminder of the value of work and the virtue of humility.

Catchy Slogans — But What Works in Practice?

Speaking of self-reassurance: on Tuesday, buzzwords like proportionality, risk-based regulation, and international competitiveness through a «level playing field» were frequently heard. These concepts are largely uncontroversial on the surface, yet in reality, they conceal tricky trade-offs and conflicting goals, especially since there is no consensus on their hierarchy.

Representatives of smaller banks, for instance, insist that regulation must be scaled to size and therefore proportional. UBS, on the other hand, argues that regulation should, above all, ensure it remains internationally competitive – regardless of how sensible or misguided the rules might be elsewhere. Meanwhile, economists often advocate a risk-based approach to safeguard financial stability. Yet the case of Credit Suisse has shown that implementation is anything but straightforward.