Saturday, 1 March 2008


There are many reasons why people choose to arrange Private banking in Switzerland. It is said that Switzerland is the Bank of the world and certainly its banking credentials are unique. It offers a stable and secure private banking environment and, uniquely, has done so for centuries. The political stability of the Swiss Federation has been the backdrop for the development of unique Banking and asset management expertise with an underlying philosophy of Banking secrecy, or as it is now more usually referred to "financial confidentiality." This is a truly unique quality in a world where almost everywhere else has surrendered in the face of the war against drugs, or the war against terror or some other political objective the net effect of all of which seems to amount to a war against an individuals right to privacy. To be clear, there is absolutely nothing illegal about having Banking facilities in Switzerland.

In a world where government has pressured almost every other off-shore haven into information sharing agreements, Switzerland alone has remained steadfast and declared that its legendary banking confidentiality is not up for compromise and the international agreements it has entered into have preserved its unique status in the world as a trustworthy place to do confidential business.

Of course it is worth noting that although secrecy is a cornerstone of Swiss banking this does not mean Switzerland is a hiding place for the proceeds of financial crime. The Swiss government is a party to international strategies to combat money laundering and terrorist financing and Swiss banks do not tolerate crime. Confidentiality is lost when there is notice of fraud or other crime, however as is often pointed out confidentiality is not normally at risk where unpaid taxes are the issue as, under Swiss law, this is merely viewed as a misdemeanor. Another feature of banking in Switzerland is there is no tax on foreign money and its resultant income. Non-residents' bank accounts in Switzerland can be completely tax-free at source if they are structured correctly. In a world where we seem to be taxed from birth up to and including death this is again an attraction. Of course domiciliary jurisdictions and their tax liabilities may vary, but at source no tax arises if structured correctly.

Swiss bankers are the world leading experts in the field of wealth preservation and management. There are over 450 Banks in Switzerland, ranging from some of the largest commercial banks in the world to small boutique Banks, all regulated by the Swiss Banking Commission and governed by the Swiss Banking Law of 1934 which amongst other things legally enshrines a customers right to privacy previously discussed, but within this group of 450 Banks not all are the same.

There are for instance many Banks based in other jurisdictions who, to service the demands of their customers for off-shore investments, have established a presence in Switzerland. Readers in the UK may be aware of the recent UK case where the five major High Street Banks were ordered by the UK court to hand over to the UK Revenue (tax) authorities details of their customers who had accounts off-shore. Swiss Banks are not subject to this judgment but it is a good illustration of how banking in the wrong jurisdiction can mean that at the stroke of a pen privacy can be removed. In my view it would be a poor advisor who would recommend a client to a Bank where there was a possibility of such a loss of privacy.

Even Swiss Law recognizes that not all Bankers are the same and legally protects the misuse of the term "Private Banker," this being legally limited to those Banks where one or more of the Bank owners have full personal and business unlimited liability for the performance of their Bank. In an age where fewer and fewer people in any field can be held accountable for their performance this is indeed a refreshing throwback to, dare I say, a more responsible age. These Private Bankers have put all their personal wealth and assets as well as business assets on the line in addition to the other protections customers enjoy under the law.

The term "Private Banker" is therefore different from that of "Private Bank" which does not necessarily mean the same thing and can apply to banks that are limited liability companies. The term "Private Banking" simply refers to banking activity serving private individuals who want to have their assets managed professionally. Readers wanting a "classic" Swiss bank should be aware that the inclusion of the words "Private bank" or "Banking " in the title of a bank does not mean that its Bankers are the true legally defined Private Bankers.

Off course, like any other country in the world, Switzerland offers normal banking services through its own "High Street" banks, but when you are talking about asset management and wealth planning the expertise and knowledge peculiar to Switzerland and its specialist Banks is essential. When deciding to make a selection from the 450 Swiss banks, it is important to know where to go and how to make your choice. Most people cannot take the time necessary to "trawl" the marketplace and get to know the Banks and their different profiles and specialties, and for that reason the classic firms of "Apporteurs d'affaires" who dealt with the Banks, making introductions and broking the business to those who could best service it, grew up and continues to this day. In Philippe de LaCroix Associes we are the last such remaining classic firm and who though based in Zurich we have executives traveling throughout the world to service clients needs. Such firms were traditionally ultra secretive but even in Philippe de LaCroix Associes we now have a web presence! How times have changed!
Although Swiss banking privacy is legendary, secrecy is not the most important reason for Switzerland's success as a center of international finance. Of greater significance are the financial and economic expertise and infrastructure combined with the stability of the Swiss franc. Switzerland exists as the leading banking center for private wealth in the world today controlling somewhere over 5 trillion dollars of off-shore invested funds - and growing! For centuries the Swiss have served as investment bankers to the world; to kings, nobility and latterly to celebrities, executives, entrepreneurs and other successful people. I am confident that will not change because the demand by successful people for world class Banking is as strong as ever and the number of places where it can be experienced is regrettably diminishing all the time.

Of course having Private Banking in Switzerland is not financially limiting. Swiss bankers operate an "a la carte" approach for their international investors, refreshing in an age where banks seem increasingly to resemble "fast food" outlets. Options may range across industries and countries, established or emerging markets, bonds, commodities or whatever you wish or you and your banker decide. The world is indeed open to you through your Swiss Banker. We have clients who deposit funds and leave them as cash deposits for confidential withdrawal purposes; others who specify the investments of their choice; others who give mandates to their bankers outlining an agreed approach after which they leave all decisions to the Bankers -subject only to the mandate. Indeed we have clients on "all points in between" including our "distance account service" where we are mandated to deal with the Bank and the client relays instructions through us to maintain a distance between the client and the bank as a further guarantee of maintaining financial privacy.

In a fast and seemingly ever changing world Swiss Banking remains as a reassuringly unchanging benchmark; a unique and constant point of reference against which all others have to be judged. In Philippe de LaCroix we have a saying that is a part of our philosophy and it is as true today as when our founder first expressed it back in 1909; "Everyone needs more than one Banker, but at least one must be Swiss!"

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