| Banking in Switzerland is characterized | | | | it. The secrecy provisions were not |
| by stability, privacy and protection of | | | | included in the first draft of the law, |
| clients' assets and information. The | | | | which mainly concerned administrative |
| country's tradition of bank secrecy, | | | | matters such as bank supervision. The |
| which dates to the Middle Ages, was | | | | provisions, found in Article 47(b), were |
| first codified in a 1934 law.[1] All | | | | added before passage of the bill due to |
| banks in Switzerland are regulated by | | | | Nazi authorities' attempts to |
| the Federal Banking Commission (FBC), | | | | investigate the assets of Jews and |
| which derives its authority from a | | | | "enemies of the state" held in |
| series of federal statutes. | | | | Switzerland. |
| Overview | | | | Recent statutes |
| Switzerland is an economically advanced | | | | A new banking law entered into force on |
| and prosperous nation, with a gross | | | | 1 January 1995. The law permits foreign |
| domestic product (GDP) larger than that | | | | banks to open subsidiaries, branches, or |
| of some larger western European nations. | | | | representative offices in Switzerland |
| In addition, the value of the Swiss | | | | without approval by the FBC. This |
| franc (CHF) has been relatively stable | | | | opportunity is based upon reciprocity, |
| compared to that of other currencies. In | | | | and requires a prior agreement between |
| 2003, the financial sector comprised an | | | | Switzerland and foreign governments. The |
| estimated 14% of Switzerland's GDP and | | | | new law also requires banks to announce |
| employed approximately 180,000 people | | | | any acquisition or sale of its shares by |
| (110,000 of whom work in the banking | | | | a major shareholder (minimum 10% of |
| sector); this represents about 5.6% of | | | | capital or voting rights) to the FBC |
| the total Swiss workforce. | | | | (shareholders engaging in such activity |
| Swiss neutrality and national | | | | must notify the bank). The bank can also |
| sovereignty, long recognized by foreign | | | | hold major shareholders of a bank liable |
| nations, have fostered a stable | | | | for improper conduct. To enforce |
| environment in which the banking sector | | | | compliance with these shareholder |
| was able to develop and thrive. Even | | | | requirements, the FBC is authorized to |
| though it is near Europe's geographical | | | | block their voting rights if they fail |
| center, Switzerland maintained | | | | to comply. In addition, the FBC can now |
| neutrality through both World Wars; is | | | | provide information to foreign law |
| not a member of the European Union or | | | | enforcement authorities in cases covered |
| the European Economic Area; and was not | | | | by mutual legal assistance agreements |
| even a member of the United Nations | | | | Electronic payments |
| until 2002. | | | | Swiss banks, as well as the post office |
| Currently an estimated one-third of all | | | | (which handles some financial |
| funds held outside their country of | | | | transactions) use an electronic payments |
| origin (sometimes called "offshore" | | | | system known as Swiss Interbank Clearing |
| funds) are kept in Switzerland. In 2001 | | | | (SIC). The system is supervised by the |
| Swiss banks managed US$?2.6 trillion. | | | | Swiss National Bank and is operated via |
| The next year it only handled US$2.2 | | | | a joint venture. SIC handled over 250 |
| trillion, US$?400 billion less than | | | | million transactions in 2005, with a |
| before. This has been attributed to both | | | | turnover value of 41 trillion Swiss |
| a bear market and possibly to stricter | | | | francs. |
| regulations on Swiss banking. | | | | Major banks |
| The Bank of International Settlements, | | | | As of 2006, there are 408 authorized |
| an organization that facilitates | | | | banks and securities dealers, ranging |
| cooperation among the world's central | | | | from the "Two Big Banks" down to small |
| banks, is headquartered in the city of | | | | banks serving the needs of a single |
| Basel. Founded in 1930, the BIS chose to | | | | community or a few special clients. |
| locate in Switzerland because of the | | | | UBS |
| country's neutrality, which was | | | | UBS |
| important to an organization founded by | | | | UBS AG and Credit Suisse are |
| countries that had been on both sides of | | | | respectively the largest and second |
| World War I | | | | largest Swiss banks and account for over |
| Foreign banks operating in Switzerland | | | | 50% of all deposits in Switzerland; each |
| manage 870 billion Swiss francs worth of | | | | has extensive branch networks throughout |
| assets (as of May 2006). | | | | the country and most international |
| Law and regulation | | | | centres. |
| The Federal Banking Commission, an | | | | Due to their size and complexity, UBS |
| independent agency of the Swiss | | | | and Credit Suisse are subject to an |
| government within the Federal Department | | | | extra degree of supervision from the |
| of Finance, supervises most | | | | Federal Banking Commission. |
| banking-related activities as well as | | | | UBS |
| securities markets and investment | | | | UBS came into existence in June of 1998, |
| funds.Regulatory authority is derived | | | | when Union Bank of Switzerland, founded |
| from several statutes. | | | | in 1862, and Swiss Bank Corporation, |
| The office of the Swiss Banking | | | | founded in 1872, merged. Headquartered |
| Ombudsman, founded in 1993, is sponsored | | | | in Zürich and Basel, it is |
| by the Swiss Banking Ombudsman | | | | Switzerland's largest bank. It maintains |
| Foundation, which was established by the | | | | seven main offices around the world |
| Swiss Bankers Association. The | | | | (four in the United States and one each |
| ombudsman's services, which are offered | | | | in London, Tokyo, and Hong Kong) and |
| free of charge, include mediation and | | | | branches on all five continents. |
| assistance to persons searching for | | | | As of 2005, UBS had a net profit of |
| dormant assets. The ombudsman handles | | | | US$7.2 billion, a market capitalization |
| about 1,500 complaints raised against | | | | of over $100 billion, and 69,569 |
| banks yearly | | | | employees. |
| Statutes | | | | UBS has used the slogan "You & Us" in |
| Banking law of 1934 | | | | their marketing communication. The |
| The Swiss Parliament passed the Banking | | | | slogan aims to highlight the firm's |
| Law of 1934, which codified the rules of | | | | client-based approach. |
| secrecy and criminalizes violation of | | | | |