GENEVA (Reuters) – Swiss banks will have to shift more operations to the European Union if Switzerland fails to secure a treaty with the trading bloc, Geneva private bankers said on Tuesday.
After four years of talks, a deal defining Switzerland’s relationship with the EU remains in limbo, with concerns about preserving Swiss sovereignty holding up a resolution to the country’s biggest foreign policy issue.
Geneva Financial Center, representing 104 banks, said that reviving the stalled treaty was a “necessary precondition for negotiations on a future agreement that would give Swiss banks and financial intermediaries free access to EU markets”.
“Failing that, they will be forced either to relocate or to develop some of their activities in the EU, adversely impacting jobs and tax revenues in Switzerland at both national and local level,” Yves Mirabaud, president of the group and chairman of Mirabaud & Cie SA, told a news conference.
Brussels has said the Swiss will get no increased access to the single market until the treaty, which would see Switzerland routinely adopt single market rules, is settled.
The Center urged the Swiss government to send a “strong signal” backing a deal after the parliamentary election on Oct. 20.
Asked whether he feared banks might leave if there were no deal, Mirabaud said: “What I fear is not that they leave the financial center, but that they pursue their growth outside of Switzerland – in particular as we’ve seen in Luxembourg or other European centers.”
The banking sector employs 35,600 people in Geneva and contributes 12% of the canton’s economy, according to the group.
Nearly half of the assets managed in Switzerland, still the world’s largest financial center for cross-border private wealth management, come from abroad, including some 1 trillion Swiss francs ($1.01 trillion) from the EU, it said.
Edouard Cuendet, the Center’s managing director, said Switzerland was “still number one” in cross-border management, though he said market share had dipped since the automatic exchange of client information with tax authorities came into force.
“Most establishments expect next year to be more difficult than 2019,” Cuendet said, citing uncertainty and pressure on margins.
Geneva bankers are also “on edge with regard to the risks generated by negative rates, which look to be here to stay,” Mirabaud said.
The Swiss National Bank’s (SNB) negative interest rates were driving investors to “over-allocate” to certain asset classes such as real estate and have also hit pension funds, he added.
Reporting by Stephanie Nebehay; Editing by Jan Harvey