Swiss banks had a long tradition of providing privacy and providing top quality service. This prompted wealthy individuals and businesses from throughout the world to invest their funds in Swiss banks. However, in recent years, many Swiss banks have been forced to turn over financial information and account details on foreign investors with Swiss bank accounts.
In fact, many individuals with Swiss bank accounts have come under investigation for tax evasion and those who still have undeclared accounts in Switzerland should consult with a Virginia tax lawyer as soon as possible before they too come under investigation.
Because of a global crackdown on tax evasion, strict new banking regulations, and other factors such as increased automation and a decline in financial market volatility, Swiss banks are suffering great declines. The Financial Times recently published a comprehensive article considering whether all of the changes that have been occurring will result in the death of the Swiss banking industry.
Is the Swiss Banking Industry Dying?
While Swiss banks were once able to thrive by providing help to investors in keeping their money private so they did not have to report all of their funds to the IRS or other taxing entities, Swiss bankers can no longer count on success driven by their reputation for secrecy.
Some of the largest Swiss banks have been able to use their reputation for service to reinvent themselves. These banks are thriving and are breaking into emerging markets by providing a high level of support and assistance to wealthy accountholders. For example, the banks can help clients to do things like find lawyers in obscure locations when necessary.
Many smaller Swiss banks, however, do not have the reputation for service or the global network of connections necessary to attract wealthy investors solely on the basis of the service they provide. For these financial institutions, surviving within the private banking industry will be difficult. Even many of the larger banks are struggling as fewer wealthy individuals make investments in Swiss accounts.
Last year, for example, there were $6.7 trillion in assets under management by the entire Swiss financial industry. While this seems like a substantial amount of money, the Financial Times indicates that it is far below the 2007 peak. Furthermore, the value of assets under management has remained flat in recent years despite the fact that there have been strong gains in the global market. In other words, people are not making more investments in Swiss financial institutions even as their wealth grows.
The banking industry has already seen declines because investing in Swiss banks is less attractive for individuals and businesses. From 2005 to last year, the number of Swiss banks fell from 179 to 112. There are also many poorly performing banks currently, and the head of KPMG's financial advisory unit in Zurich indicates that among 60 or 70 poorly performing banks, approximately half will soon disappear. This means far fewer banks, fewer employment opportunities, and fewer choices for investors.
For investors who used to invest in the Swiss banking industry and who want to make a decision regarding what their best investment options are under the current regulatory system, it is advisable to consult with Virginia tax lawyer Kevin Thorn. An experienced attorney can provide information on new rules and regulations so clients can ensure legal compliance.
