Wednesday, September 20, 2006

Geneva banks expand on changing fortunes

Geneva's banking industry has notched up "significant growth" over the past two years, with employment in the sector climbing almost ten per cent. The canton's 140 banks now employ more than 18,000 staff, reflecting the increased demand for asset management as a result of a buoyant global economy and higher commodity prices.

"We are certainly benefiting from a positive environment within our traditional corresponding countries, whether in Europe, North or Latin America, the Middle East and the expansion in Asia. That generates new wealth and service opportunities for existing customers," Steve Bernard, director of the Geneva Financial Center, told swissinfo.

"You also have the oil factor for Middle East and east European customers, who have seen their wealth increase tremendously, and part of this is handled by Swiss-based banks."

Since January 2005 the number of people employed by the Geneva banking sector has risen from 16,300 to just over 18,000. Leading private banker Pictet & Cie, which employs 2,200 people worldwide, says it will have created 300 jobs by the end of the year – 60 per cent in Geneva. The bank is due to move into new headquarters in the city later this year and already needs additional office space, according to spokesman Frank Renggli.

The Geneva Financial Center estimates that the volume of assets under management in the city now stands at SFr1.5 trillion ($1.22 trillion). Swiss-based banking establishments currently manage around SFr4.5 trillion. Chantal Bourquin, spokeswoman for the Geneva Private Bankers Association, admitted that these were "good times" for the body's members. She said growth among members was not a new trend but acknowledged that this year may have outstripped previous ones.

Bernard said the vast amounts of money being placed in Geneva mirrored the revitalised fortunes of the Swiss banking sector as a whole, which was hit by the global slump post-September 11. In addition, the industry had to weather a period of uncertainty as the European Union sought to lift banking secrecy in an effort to clamp down on tax evasion.

Withholding tax

This was resolved by a deal that came into force in July last year which preserved banking secrecy in exchange for the levying of a tax on interest earned by EU residents with Swiss bank accounts.

"The difficulties we had with the EU when we were negotiating the bilateral agreements are behind us. There is no question mark at least for the next ten years and we see the pressure turning to other centres," Bernard said.

On Monday the EU announced it would be targeting financial centres in Asia, such as Singapore and Hong Kong, as part of new efforts to clamp down on tax evasion. Zurich is traditionally seen as Switzerland's banking centre but Bernard stressed that Geneva was not a junior partner but a complementary one, with a strong reputation in private banking and trade finance.

"Geneva is certainly a smaller financial centre than Zurich in terms of numbers of employees. But I believe it is roughly on a par when you talk about asset management and it's definitely ahead in terms of trade finance," he said.

swissinfo, Adam Beaumont in Geneva

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