Swiss Economy and Banking Sector

Location  Western Europe
Population (2014) 8136689↑
EU Status  not a member


Economy
National Currency  CHF (Swiss franc)
    Exchange Rate (2014-09-01) 1 EUR = 1.2072 CHF
GDP 
    Nominal GDP (2013) 490.0 bln EUR
    Real GDP Growth (2013) 2.0%above the Euro Area average (-0.5%)
above the European Union average (0.1%)
    Real GDP per Capita (2012) 44700.00 EUR
Inflation Rate 
    CPI, MoM (June 2014) -0.1%↓
    CPI, YoY (June 2014) -0.1%↓
    CPI, Year Average (2013) 0.1%↑below the Euro Area average (1.4%)
below the European Union average (1.5%)
Unemployment Rate (2012) 2.9%↑below the Euro Area average (11.3%)
below the European Union average (10.4%)
Credit Ratings (July 2014)
    Fitch AAAhighest credit quality, outlook stable
    Moody's Aaaprime, outlook stable
    S&P AAAprime
Taxation
Withholding Tax  0.0 - 35.0%
Double Taxation Agreements  99 signed agreements
Information Exchange Agreements  3 signed agreements
Banking Sector
Financial Market Development  5.304 (max 7.000)rank: 9th out of 144 countries
    Banks' Soundness 5.939 (max 7.000) rank: 26th out of 144 countries
Banking Industry Country Risk  1(1 - lowest risk, 10 - highest risk)
    Economy Risk 1
    Industry Risk 2
Country Ceiling for Deposits 
    Local Currency (CHF) Aaaprime
    Foreign Currency Aaaprime
Banking Sector Structure 
    Number of Banks290
    Recent Changes (2013) new banks: 1, closed banks: 15
    Consolidated Assets (2013)2321 bln EUR ↑

Major Banks
 UBS AG  HSBC Private Bank (Suisse) SA
 Credit Suisse AG  Bank Julius Bär & Co. AG
 Raiffeisen Group and 328 Raiffeisen banks.  Mortgage bond bank of the Swiss mortgage institutions
 Zürcher Kantonalbank
List of Banks in Switzerland

Swiss Economy

National Currency

Durung the last 10 years EURCHF exchange rate was within the range 1.1418 - 1.6762, reaching its maximum in Oct 2007 and falling to its minimum in Jul 2011.

Euro to Swiss franc (EURCHF)
Chart 1. Euro to Swiss franc (EURCHF). Source: ECB

GDP

According to Eurostat, nominal GDP of Switzerland in 2013 was 490.0 bln EUR.

Switzerland outperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.7% over the past 10 years (2002 - 2012). In 2013 real GDP growth was 2.0% which was above the Euro Area average (-0.5%) and above the European Union average (0.1%). Real GDP growth in 2014 - 2018 are IMF's estimates.

Real GDP Growth in Switzerland
Chart 2. Real GDP Growth in Switzerland. Source: Eurostat, IMF

Switzerland has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 18.50% over the past ten years (2002 - 2012). In 2012, real GDP per capita in Switzerland was 44700.00 EUR.

GDP per capita at PPP in 2014 - 2018 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Switzerland; European Union = 100
Chart 3. GDP Per Capita at Purchasing Power Parity in Switzerland; European Union = 100. Source: Eurostat, IMF

Inflation Rate

According to Eurostat, inflation rate in Switzerland in 2013 expressed as annual percentages of average consumer prices was 0.1% which was below the Euro Area average (1.4%) and below the European Union average (1.5%). Inflation rates in 2014 - 2018 are IMF's estimates.

Inflation Rate in Switzerland
Chart 4. Inflation Rate in Switzerland. Source: Eurostat, IMF

Taxation in Switzerland

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Switzerland are shown in Table 1.

DividendsInterest
Natural person, resident35.035.0
Natural person, non-resident35.035.0
Table 1. Withholding tax rates in Switzerland.

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation. Switzerland signed DTAs with the following countries:

AlbaniaAlgeriaAntigua and Barbuda
ArgentinaArmeniaAustralia
AustraliaAustriaAzerbaijan
BangladeshBarbadosBelarus
BelgiumBritish Virgin IslandsBulgaria
CanadaChileChina
ChinaColombiaCote D'Ivoire
CroatiaCzech RepublicDenmark
DominicaEcuadorEgypt
EstoniaFaroe IslandsFinland
FranceGeorgiaGermany
GhanaGreeceGrenada
Hong KongHungaryIceland
IndiaIndonesiaIran, Islamic Republic of
IrelandIsraelItaly
JamaicaJapanKazakhstan
Korea, Republic ofKuwaitKyrgyzstan
LatviaLiechtensteinLithuania
LuxembourgMacedoniaMalaysia
MaltaMexicoMoldova, Republic of
MongoliaMontenegroMontserrat
MoroccoNetherlandsNew Zealand
NorwayPakistanPeru
PhilippinesPolandPortugal
QatarRomaniaRussian Federation
Saint Kitts and NevisSaint LuciaSerbia
SingaporeSlovakiaSlovenia
South AfricaSpainSri Lanka
SwedenTajikistanThailand
Trinidad and TobagoTunisiaTurkey
TurkmenistanUkraineUnited Arab Emirates
United KingdomUnited StatesUruguay
UzbekistanVenezuelaVietnam

Information Exchange Agreements

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil. Switzerland signed TIEAs with the following countries:

GuernseyIsle of ManJersey

Swiss Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2012-2013, financial market development in Switzerland is scored 5.304 out of maximum 7.000 and ranked 9th out of 144 analysed economies. Soundness of banks is scored 5.939 bringing Switzerland into the 26th place, trustworthiness and confidence of financial market is scored 5.783 (13th place).

Financial Market Development in Switzerland
Chart 5. Financial Market Development in Switzerland. Source: WEF

Banking Industry Country Risk

Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.

Switzerland is included into group '1' with economic risk scored '1' and industry risk scored '2'.

BICRA group1
Economic risk1
    Economic resiliencevery low
    Economic imbalancesvery low
    Credit risk in the economylow
Industry risk2
    Institutional frameworklow
    Competitive dynamicslow
    Systemwide fundingvery low
Government support assessmentsupportive
Table 2. BICRA for Switzerland. Source: S&P's.

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Swiss franc) deposit ceiling for Switzerland is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

Banking Sector Structure

Currently there are 290 credit institutions operating in Switzerland.

Recent structural changes (2011 - 2013) of the banking sector of Switzerland are summarised in Table 3.

201120122013
Number of Opened Banks221
Number of Closed Banks01715
Table 3. Recent structural changes in the banking sector of Switzerland.

All the credit institutions operating in Switzerland can be classified into several bank categories. Table 4 summarises the number of banks in each bank category.

Bank CategoryNumber of Banks
Big banks2
Branches of foreign banks27
Cantonal banks24
Central banks1
Institutions with a special field of business6
Other banks / Banks that specialise in stock exchange, securities and asset management business47
Other banks / Foreign-controlled banks93
Other banks / Other banking institutions14
Private bankers / Private bankers who do not actively seek deposits from the public11
Raiffeisen banks1
Regional banks and savings banks / Other regional banks and savings banks27
Regional banks and savings banks / RBA Holding banks37
Table 4. Number of banks by bank category in Switzerland.

The list of the most recently opened banks in Switzerland is provided in Table 5.

NameStart Date
 PostFinance AGJanuary 2013
 Aquila & Co. AGJanuary 2012
 Quilvest (Switzerland) Ltd.January 2012
 J.P. Morgan Securities plc, London, Zweigniederlassung ZürichJanuary 2011
 Neue Helvetische Bank AGJanuary 2011
Table 5. The most recently opened banks in Switzerland.