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March 10, 2017

50pc of assets managed by Swiss banks belong to foreigners

Top Story

March 10, 2017

India at 75th place in terms of money held by its citizens in Swiss banks in 2016;
Pakistanis at 69th position with deposits worth 1.5 billion Swiss Francs

LAHORE: Almost 50 percent of assets under management of the266 banks operating in Switzerland belong to foreigners; research conducted by the Jang Group and Geo Television Network reveals.

According to the Basel city-based “Swiss Bankers Association”, the amount of assets under management of financial institutions in Switzerland rests at Swiss Francs (CHF) 6,567. 6 billion.

Since the value of one Swiss Franc or CHF is currently equivalent to 0.987 American dollar, so there is not much need to convert Swiss Francs to US dollars. In 2015, Swiss banks had represented 53.3 percent of the total value added of the Swiss financial sector, totalling CHF 32 billion or 5.12 percent of the country’s GDP, the Swiss Bankers Association states on its website.

The UBS and Credit Suisse, the two largest banks in Switzerland, were ranked at 27 and 29 positions among international financial institutions, with assets of approximately US $941 billion and US $909 billion respectively.

Founded in 1912 as the “Association of Representatives of the Swiss Banking Profession” before being renamed the “Swiss Bankers Association” in 1919, the website of this body reveals that banks have existed in Switzerland since the 16th century.

A February 2017 report of the Swiss National Bank, country’s Central Bank, shows that it holds CHF 668.181 billion (USD 660.845 billion) in foreign currency.

Of the 266 banks currently operating in Switzerland, not fewer than 228 had reported annual profits in 2015.

There were 275 banks functioning in Switzerland in 2014, 283 in 2013, 297 in 2012, 312 in 2011, 320 in 2010, 325 in 2009, 327 in 2008, 330 in 2007 and 331 in 2006.

Renowned British news agency Reuters and the Swiss Bankers Association have both estimated that the 266 Swiss banks together employ 103,041 people.

The Swiss net income by banking activity had stood at Swiss Francs (CHF) 64.6 billion in 2015, CHF 61.4 billion in 2014, CHF 60.8 billion in 2013, CHF 59 billion in 2013, CHF 59.1 billion in 2012, CHF 61.5 billion in 2011, CHF 54.3 billion in 2010, CHF 49 billion in 2009, CHF 54.3 billion in 2008, CHF 70.7 billion in 2007 and CHF 73 billion in 2006.

Swiss banks and deposits held by Pakistanis; just a couple of days ago, while speaking on the floor of the National Assembly, Finance Minister Ishaq Dar had revealed that the amount of Pakistani money hidden in Switzerland was resting at $200 billion.

Dar had actually quoted a former Swiss foreign minister, Micheline Calmy-Rey.

Meanwhile, the International Consortium of Investigative Journalists (ICIJ), which had flashed headlines across the globe on April 3, 2016 by coming up with the “Panama Papers”, Pakistan is ranked 48th among the countries with the largest dollar amounts in the leaked Swiss files.

However, the ICIJ had categorically stated last year that Swiss bank accounts and trusts had legitimate uses too.

According to the International Consortium of Investigative Journalists, the maximum amount of money associated with a client connected to Pakistan was US$133.5 million!

This Washington-based international network comprising 165 investigative journalists in over 65 countries, had reported that 338 Pakistani clients operated 648 bank accounts in Switzerland and the total money parked in these accounts had stood at US $859.7 million.

Switzerland’s tradition of bank secrecy dates back to Middle Ages or the medieval period that had lasted from the 5th to the 15th century.

Bank secrecy was first codified in the “Federal Act on Banks and Savings Banks”, colloquially known as the Banking Law of 1934.

(Reference: A 2002 Time Magazine article “Silence is golden”)

Having gained a worldwide notoriety for stashing black money or ill-gotten wealth, Swiss banks have somehow come under the spotlight in recent years, following growing awareness on ill-gotten wealth and money laundering.

Switzerland is a major international financial centre vulnerable to the layering and integration stages of money laundering; despite significant legislation and reporting requirements, secrecy rules persist and non-residents are permitted to conduct business through offshore entities and various intermediaries”.

Comparing the deposits of Indians and Pakistanis in Switzerland:

The July 4, 2016 report of the “Times of India” had noted that India had slipped to 75th place in terms of money held by its citizens in Switzerland’s banks, while the United Kingdom remained on top.

India was placed at the 61st place in 2015 and used to be among top 50 countries in terms of holdings in Swiss banks till 2007. India was ranked highest, at the 37th place, in 2004.

The “Times of India” had stated: “As per the latest annual update on Swiss banks, released by Switzerland’s central bank (Swiss National Bank), the total money held there by foreign clients fell by nearly four percent to Swiss franc (CHF) 1.42 trillion at the end of 2015”.

On bank deposits owned and operated by Pakistanis in Switzerland, the top Indian newspaper had reported: “With 1.5 billion Swiss Francs, Pakistan is placed at 69th place”.

Giving details, the “Times of India” had maintained: “In terms of individual countries, the UK accounted for the largest chunk, at about CHF 350 billion or almost 25 percent of the total foreign money with Swiss banks. The US came second with nearly CHF 196 billion or about 14 percent. No other country accounted for a double-digit percentage share, while others in the top 10 included West Indies, Germany, Bahamas, France, Luxembourg, Hong Kong and Panama. India was ranked 75th with CHF 1.2 billion, which is not even 0.1 per cent of the total foreign money parked in Swiss banks and is the lowest for the country in at least two decades or since 1996 — the first year for which full comparable data is available”.

It had added: “Pakistan was placed higher, at the 69th place, with CHF 1.5 billion — a shade better than 0.1 percent of total foreign money parked in Swiss banks. India was also lowest ranked among the BRICS nations — Russia was ranked 17th (CHF 17.6 billion), China 28th (CHF 7.4 billion), Brazil 37th (CHF 4.8 billion) and South Africa 60th (CHF 2.2 billion). Other countries that ranked higher than India included Mauritius, Kazakhstan, Iran, Chile, Angola, Philippines, Indonesia and Mexico, while a number of so-called tax havens were also placed above, including Jersey, Cayman Islands, Cyprus, Marshall Islands, Bermuda, Belize, Gibraltar, Isle of Man, Seychelles and St Vincent and the Grenadines. All offshore financial centres together held CHF 378 billion in Swiss banks. 

The total for developing countries stood at CHF 207 billion, while the same for the developed countries was much higher. India was ranked in top 50 countries between 1996 and 2007, but started declining after that — 55th in 2008, 59th in 2009 and 2010 each, 55th again in 2011, 71st in 2012 and then 58th in 2013”.