Navigating to Tomorrow. Swiss Banking 2013: Challenges and Opportunities

Abstract

I n his latest book ‘Austerity’, Brown University’s Professor Mark Blyth quite aptly explains that the recent financial crisis at heart is not, as many have suggested, a sovereign debt crisis but one that “… started with the banks and will end with the banks”. 1 As with all major financial upheavals, one of the results has been a huge wave of regulatory initiatives – often dubbed the ‘Regulatory Tsunami’ – unleashed by governments and supranational bodies worldwide upon the financial industry and its players. Many of the new regulations, such as the US Dodd-Frank Act or even the EU Alternative Investment Fund Managers Directive (AIFMD), which on the surface aim to create greater transparency and better investor protection, may be suspected to largely serve as a means of raising much needed additional tax income for governments to help them recover or raise funds to compensate for the huge amounts they have spent on bailing out so called ‘too big to fail’ ailing financial institutions. Whatever the case may be, financial intermediaries, most notably banks, face an altered reality today. With shrinking margins, increased transparency, more demanding and segmented clients, higher and costlier regulatory demands which simultaneously limit their leeway to generate alpha while increasing the cost of refinancing, the classic value chains, and indeed entire business models of banks are under pressure. What is true for banks worldwide also applies to Swiss banks and private banks in particular. In addition to these universal challenges, they also face other, Swiss-specific issues. But as always – where there are challenges there are also opportunities.