When bank(er)s come under fire
The Bisang gang, AHV controversy and why UHNWIs are bypassing Switzerland
Dear Insider,
A banker just can’t get a break these days.
Get too good at what you do - people will hate you. Drop the ball and incur losses - people will hate you more.
But the stakes are high. Not only do banks (in Switzerland especially) serve the rich and famous - but they are also charged with managing public money. And that gives new meaning to “too-big-to-fail.”
And when things aren’t tough enough - a jealous younger generation throws a wrench in the works by scaring off new money.
This week’s edition of The Swiss Insider focuses on two conundrums that aren’t making life easy for members of the financial elite.
Not that they need any sympathy…
Enjoy!
Ian
💡PS: Get more timely updates and insights on LinkedIn and on X.
Person(s) in the News
There are many “power couples” in Swiss business.
Nadja Schildknecht and Urs Rohner used to be one (See last week’s TSI).
And Mirjam Staub-Bisang - now former CEO of BlackRock Switzerland - with husband Martin Bisang used to be one too.
While Mirjam’s ESG focus eventually saw her become expendable at BlackRock, Martin’s Bellevue Group (where he is a major shareholder) is bringing its offices back to downtown Zurich.
Turns out hiring top talent is “a thing” and motivated bankers like to be where the action is.
Big surprise…
💡 Meet 10 “Up-And-Coming” Swiss Bankers
While some bankers are having trouble - others are on the rise. Learn more about Stefan Bollinger, Beatriz Martin Jimenez, Christian Reich - and more…
🇨🇭🇺🇸 A matter of national (and social) security
Security has always been a key part of the Swiss value prop.
Rugged mountains, a standing army and bunkers are physical reminders that Switzerland means “safe.”
But what about your pension fund?
A low-level politcal scandal is brewing after the AHV pension administration decided to hold its funds with US-based State Street - instead of Swiss giant UBS. The Swiss bank held the role of depotbank for 26 years.
The fear?
A potential angle for the United States to enforce some sanctions on Switzerland by holding its pension funds hostage.
The scenario is not entirely without justification.
Many still remember the pressure applied to Swiss banks in the aftermath of the Great Financial Crisis when the sacred “bank secrecy” laws were repealed.
Meanwhile, Compenswiss justified its decision by pointing out that Swiss assets will still be sub-custodied with UBS - while US assets will remain in America.
The Insider Advantage:
💡The Swiss financial industry has long profited by remaining independent. Skipping strict sanctions on Russians during the Cold War helped boost AuM - while ostensibly helping victims of Soviet oppression. But real and true independence is now “muddied waters.”
💡 A decision to keep AHV funds at UBS would have also incurred risks. After the fall of Credit Suisse, it is likely that public money may shun the mega-bank. Too-big-to-fail is no reassurance in times of financial fragility.
💡With an aging population and heated debate about plugging public financial holes, expect the AHV and pension topic to spur more acrimony.
At least Swiss finances are not in the same position as France.
🤑 Not profiting
Another “small country in Europe” has a tax problem.
And it has consequences for Switzerland.
The United Kingdom plans to end the "non-dom" tax status by April 2025, which could drive wealthy individuals to leave the country, potentially reducing the millionaire population by 20%. The reform aims to raise revenue for public services, but experts - of course - warn the departure of high-income taxpayers may negatively impact tax collections.
One country that could profit is - again, of course - Switzerland. The Cantons of Zug, Schwyz and Luzern would be natural destinations for (U)HNWIs from Britain.
But there’s a catch.
Switzerland’s recent lurch to the left puts it at a major disadvantage.
Populist initiatives around retirement benefits and a proposal from the Young Socialists (JUSO) to heavily tax inheritances over $50 million are a shot in the foot.
While Swiss banks and asset managers - and real estate - could have profited greatly from the UK’s policies, it falls to Liechtenstein, Dubai, Greece and Italy that will take the cake.
The Insider Advantage:
💡The “unholy alliance” between the working class voters of right-wing SVP and left-wing SP continues to play havoc with the economic positioning of Switzerland.
Their combined votes pushed through additional AHV benefits, creating a need for more taxes in Switzerland.
💡 Without an influx of new money, the business case of Switzerland as a wealth management hub will likely fade over time.
Younger generations are more mobile and the Middle East is a strong pull - if only for the weather.
📈 A chart (or two) is worth…
Swiss wages are high - but their growth has ebbed back down below 2% in a slight reversal of the post-covid trend.
The Bonus
🚝 Delivering for Europe - Stadler Rail has hit the jackpot - at the right time. Denmark’s Lokaltog has placed an order for 24 of Stadler’s battery-powered trains. (Link)
🌾 Farmy falling - Swiss startup Farmy - with its fresh produce delivery service for faremers - falls on hard times as Migros subsidiary Alnatura cancels its cooperation agreement. (Link)
🚌 Bus(ted) - Swiss Post subsidiary Postauto, with its bus routes in rural, mountainous areas of Switzerland, will cut 70 jobs in a cost-reduction plan. (Link)