Swiss Bank Group Sees EU Marketing Restrictions as Costly

Switzerland is at risk from plans to tighten European regulations on cross-border wealth management as the industry is vital to the nation’s economy, according to the Association of Swiss Private Banks.

A move by the European Union to ban Swiss banks from marketing services directly to EU residents from Switzerland would cut tax receipts and jobs, Nicolas Pictet, vice president of the association of 10 banks, told reporters today in Bern, the Swiss capital.

“Access to markets from Switzerland is vitally important,” Pictet said. “It’s not the interest of which company or bank group that’s the question. It’s well and truly about the interest of the country.”

The ASPB has called on the Swiss government to negotiate an agreement with the EU that maintains the free movement of financial services between Switzerland and EU states so banks don’t have to establish subsidiaries and deploy thousands of employees abroad. The banks are ready in return to take part in a system of automatic exchange of tax information, according to the ASPB.

A global crackdown on tax evasion has forced the Swiss government to weaken laws protecting client secrecy that have helped transform the country into the world’s largest cross-border wealth-management center with about $2.2 trillion of assets. With European offshore clients pulling money from Zurich to Geneva, Swiss banks are looking to expand their networks of foreign clients.

‘Unflattering Characterizations’

Wealth management accounts for more than 5 percent of the nation’s tax receipts and about 3 percent of gross domestic product, the ASPB said. Worldwide, the industry is growing amid a surge in private financial wealth and much of the business takes place offshore for legitimate reasons such as to diversify risk, according to Pictet.

“It’s incorrect to associate the word offshore with a bunch of unflattering characterizations, notably tax evasion,” he said.

Global private financial wealth rose 5.6 percent a year to $135.5 trillion from 2010 to 2012, and will advance 4.8 percent on average until the end of 2017, Boston Consulting Group said in May. Wealth held offshore is estimated to climb to $11.2 trillion in 2017, from $8.5 trillion in 2012, it said.

Pictet is also a managing partner at his family’s business, Pictet & Cie. Group SCA, the largest closely held private bank in Switzerland, and a member of the ASPB. Cie. Lombard, Odier SCA, which owns Geneva’s oldest private bank, is also a member of the association.

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