The End of Swiss Banking Secrecy ?

The End of Swiss Banking Secrecy ?


The Swiss government proposed bill to allow banks to share clients data with the U.S. received a setback with the parliamentary committee rejection of the draft.
Today’s vote by the upper house will probably decide the future of Swiss banking secrecy. Both bankers and Cantonal financial directors are supporting the agreement as a rejection could lead to criminal indictments for some Swiss banks with obviously a very bad impact to business.

With very limited information available it is however clear that one of the historical competitive advantages of Swiss banks is going to be impacted. The main issue is if the acceptance of some unilateral conditions will set an important precedence that might lead to the end of Swiss banking secrecy.

In my view several Swiss major banks have already adapted their business model by leveraging their competitiveness on security and stability and by refocusing on high growth area like Asia but with a very fierce competition the loss of secrecy might have a negative impact to business.

A recent drop on several Swiss banks might still be a buying opportunity, especially for these banks that have already successfully changed their business model.

Dr. iur. David Costa

David Costa is Dean of Faculty and one of the founders of Robert Kennedy College. In his capacity as Dean, Dr. Costa oversees the faculty review process and several of the academic programmes of the college. Dr. Costa holds a Dr. iur. (Doctor Iuris, Doctor of Law) degree from the University of Basel, Switzerland where he researched the law and regulations related to synthetic investment products. Dr. Costa lectures in the area of Investment Law and Money Management, and is a frequent guest on business television channels such as CNBC Europe and Bloomberg Television.


  1. Admire Nyamayaro

    I agree Dean Costa, this may be the beginning of an end of the advantage Swiss Banks had on secrecy.
    For the Swiss, they should look at it from a long term view as the secrecy did bring a lot of investment. Stability and security were an added advantage!

  2. Meek

    The Swiss should have abandoned banking secrecy many years ago. It is at odds with the current world reality. The Swiss will look back at secrecy with fond memories the rest of the world will remember it as a black mark on banking. Secrecy has no place in the modern world period. The impact on the Swiss financial centre will be tangible and significant although the Swiss still live in denial that people are attracted to the financial centre for other reasons such as stability…..think again the financial centre for private banking is very expensive as a client, margins are super thin and standards have also dropped significantly and portfolio performance leaves a lot to be desired. In general there is not much reason for foreigners wanting to have a Swiss private bank as EU countries present and future agreements have brought transparency and an end to hiding money in Switzerland.

    The private banks of Switzerland have also failed to innovate their offering beyond what they have been offering for the last 30 years. In short I predict 1 in 2 Swiss private bankers wont be working in this industry over the next 10 years. If you were to look at he number of foreign banks in Switzerland handing back their banking licenses you will be shocked. Furthermore no new banking licenses have been approved in Switzerland by Finma in recent times. Clients are now choosing Monaco as a better banking destination.

    In short its too late for Switzerland to be proposing to exchange data when they already have a gun to their head forcing them to comply with their international responsibilities. The Swiss are typical slow to make decisions but I see only bleak times ahead for Switzerand (including tax hikes) unless it rethinks its service offering as a financial centre.

  3. Titten Yohannan

    Interesting article to contemplate and debate!!.

    If the bill of client data exchange to US gets passed then undoubtedly this would detrimentally impact the Swiss banking business. Swiss banking was built and differentiated on the concept and pillar of data secrecy and stability and this is a phenomenal example of Blue Ocean strategy.

    This bill would drain of investor confidence, (mainly Asian Investors) who are more concerned of their data privacy than monetary gains. End of the day, would you like a third party watching over you?. With other alternate safe/secret investment havens already in place such as Cayman Islands, Bahamas, Singapore, Luxembourg, the influx of funds to Swiss banks will reduce considerably.

    Trying to bypass this bill will also present a problem for Swiss Banks as these banks are to deal with leading banks of G20 and G7 countries. I wish to quote a statement made by Nobel Laureate Joseph Stiglits in 2001:

    “You ask why, if there’s an important role for a regulated banking system, do you allow a non-regulated banking system to continue? It’s in the interest of some of the moneyed interests to allow this to occur. It’s not an accident; it could have been shut down at any time. If you said the US, the UK, the major G7 banks will not deal with offshore bank centers that don’t comply with G7 banks regulations, these banks could not exist”

    This is a Catch 22 Situation for Swiss Bankers, therefore a wise and judicious decision needs to be made.



  4. Kafwanka Mundubile

    l hope international community will enforce other countries to do adopt this bill under discussion. I totally agree with Dr. David Costa and other observers. This shall deter the drug dealers, dictators, terrorists to use this as safe have for illegal activities. Ropes need to be tighten further


    I think, secrecy will ever prevail despite, because individuals, institutions etc will ever have a secret to their success which is a corporate asset that must be kept secret, however it must fall in line the core values of society.

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