The Services of Swiss Banks
Swiss banks offer a variety of services. Although American banks like to advertise themselves as "one-stop banking," many Swiss banks offer far more services than their American counterparts. Along with those services they also offer growth, safety, and privacy.
While it's true that some of the very largest Swiss banks prefer to focus their business on governments, giant, multi-national corporations, and the wealthy, there are many more banks whose major clientele are made up of ordinary people. Swiss banks welcome domestic and foreign investment equally.
You enjoy many significant advantages by putting your assets into a Swiss bank. Switzerland, indisputably, leads the world in fiscal integrity. Consider these facts:
- Over the last several decades the Swiss franc has held its value better than any other currency in the world.
- The Swiss franc is backed more than 100% by gold.
- Inflation in Switzerland has been consistently lower than the inflation rate of other countries.
- Switzerland is the only country that has never imposed exchange controls.
- Switzerland has not been involved in war this century and thus has not suffered the destruction and turmoil of war.
- Switzerland protects financial privacy.
- Switzerland's national referendum ensures that its people have a vote in what is best for them and their country.
For centuries Switzerland's banking system included a heritage of secrecy. It was not until 1934, however, with the rise of the Nazis in Germany, that the Swiss put that heritage into law. This was a break with other banking systems around the world that were starting to whittle away at the idea of "privacy."
During the 1930s many nations, including the United States, began to distinguish between deposit banks and investment banks. This trend toward specialization is still apparent in the U.S. where not all banks offer all financial services. The Swiss, on the other hand, retained "universal" banking, in which banks offer various services. A Swiss bank can offer deposits and checking, as well as be a stock broker, commercial lender, investment bank, and provide services in financial planning.
Swiss banks are extremely safe. The entire Swiss financial industry is tightly regulated so that the solid reputation of their banks remains intact. The Banking Commission, for example, strictly supervises the banking industry. Swiss banks also face regular audits.
The audit process is both comprehensive and meticulous. The first audit, which is required of every Swiss corporation, complies with the Swiss corporation law. The banking audit is the second audit and is conducted by one of 17 audit firms. These firms have been approved by the Banking Commission. The audit firms follow a specific set of detailed procedures and rules as they go over a bank's books. Together, the audit firms and the banks regulate the Swiss banking industry to a greater measure than banks are regulated and supervised in other nations. Because of its preciseness, the audit has become a guarantee for Swiss bank depositors.
Liquidity and capital requirements for the operation of Swiss banks are also included in the banking law. Although quite complex, the results of the liquidity formula are clear: most private Swiss banks maintain liquidity at or close to 100%. This is virtually unheard of in the banking systems of other nations.
The formula for capital requirements in Swiss banks also results in strength and soundness of the entire banking system. In Swiss banks, 7% to 9% of the total liabilities must be equity. Compared to other countries, this is a high percentage. To prevent banks from having unrealized paper losses on its securities, Swiss banks that own securities must write them down to market, or cost (whichever is lower) every month. In the banks of other countries, unrealized paper losses are common. This, of course, erodes a bank's overall strength.
Swiss banks also play a major role in Switzerland's economy. Bankers understand business and they work with individuals and companies in starting new enterprises. Some banks publish information about business and economic conditions. Many of these publications contain specialized information or material that focuses on regional industries or projects.
Swiss banks are the foundation of Switzerland's financial system, which according to many experts is the most solid in the world. Major Swiss banks not only have branches throughout Switzerland, but also in New York, London, Tokyo, Luxembourg, and Panama. Major Swiss banks also maintain representation in most of the world's financial centers. By providing the services that any investor might need, by offering financial privacy, and through their solid reputation, safety, and world-wide influence, Swiss banks are unique in the global financial market.
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