Economy and Banking Sector of Switzerland

Switzerland is a stable, peaceful and prosperous country, with modern market economy having low unemployment and highly skilled labor force.

Among the main sectors of Swiss economy are production of chemicals, watches, textiles, machinery, and also tourism, banking, and insurance.

Swiss neutrality and national sovereignty have fostered a stable environment where the banking sector was able to develop.

Location Central Europe
Population (2015)8 236 573 ↑ (+0.01%)
EU Status not a member
Economy
National Currency CHF (Swiss franc)
    Exchange Rate (2015-08-04) 1 EUR = 1.064 CHF
GDP 
    Nominal GDP (2013)490.0 bln EUR ↓ (0.00%)
    Nominal GDP per Capita (2013)61 100 EUR ↓ (-0.01%)
    Real GDP Growth (2013)2.0 % ↑ (2012: 1.0 %)
Inflation Rate 
    CPI, MoM (Jun 2015)0.2 % ↑ (May 2015: 0.0 %)
    CPI, YoY (Jun 2015)-0.6 % ↑ (May 2015: -0.9 %)
    CPI, Year Average (2014)0.0 % ↓ (2013: 0.1 %)
Unemployment Rate (2014)3.2 % ↑ (2013: 3.2 %)
Credit Ratings (as of Jun 2015)
    FitchAAA highest credit quality, outlook stable
    Moody'sAaa prime, outlook stable
    S&PAAA prime
Taxation
Withholding Tax 0.0 - 35.0%
Double Taxation Agreements 101 signed agreements
Information Exchange 
    Exchange on Request 6 signed agreements
    Automatic Exchange starts in September 2018
Banking Sector
Financial Market Development 5.300 (max 7.000) rank: 11th out of 144 countries
    Banks' Soundness 5.900 (max 7.000) rank: 21st out of 144 countries
Banking Industry Country Risk 1(1 - lowest risk, 10 - highest risk)
    Economy Risk 1
    Industry Risk 2
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 CHF
Country Ceiling for Deposits 
    Local Currency (Swiss franc)Aaa prime
    Foreign CurrencyAaa prime
Banking Sector Structure 
    Number of Banks282
    Recent Changes (2014) new banks: 1, closed banks: 8
    Consolidated Assets (2013) 2 321 bln EUR ↑ (+0.06%)
Major Banks
 UBS AG  HSBC Private Bank (Suisse) SA
 Credit Suisse AG  Bank Julius Bär & Co. AG
 Raiffeisen Group  Mortgage bond bank of the Swiss mortgage institutions
 Zürcher Kantonalbank
List of Banks in Switzerland

Swiss Economy

National Currency

During the last 11 years EURCHF exchange rate was within the range 1.0341 - 1.6762, reaching its maximum in Oct 2007 and falling to its minimum in May 2015.

Euro to Swiss franc (EURCHF).
Chart 1. Euro to Swiss franc (EURCHF).Source: ECB.
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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 0.2% over the past 10 years (2003 - 2013). 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 - 2020 are IMF's estimates.

Real GDP Growth in Switzerland.
Chart 2. Real GDP Growth in Switzerland.Source: Eurostat, International Monetary Fund.

In 2013, nominal GDP per capita in Switzerland was 61 100 EUR.

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 59.8% over the past 10 years (2003 - 2013). GDP per capita at PPP in 2014 - 2020 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.
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Inflation Rate

According to Eurostat, inflation rate in Switzerland in 2014 expressed as annual percentages of average consumer prices was 0.0% which was below the Euro Area average (0.4%) and below the European Union average (0.6%). Inflation rates in 2015 - 2020 are IMF's estimates.

Inflation Rate in Switzerland.
Chart 4. Inflation Rate in Switzerland.Source: Eurostat, International Monetary Fund.
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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.

Dividends Interest
Natural person, resident 35.035.0
Natural person, non-resident 35.035.0
Table 1. Withholding tax rates in Switzerland.
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Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Switzerland signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Albania
 Algeria
 Antigua and Barbuda
 Armenia
 Australia
 Austria
 Azerbaijan
 Bangladesh
 Barbados
 Belarus
 Belgium
 British Virgin Islands
 Bulgaria (Oct 2013)
 Canada
 Chile
 China
 Colombia
 Cote D'Ivoire
 Croatia
 Czech Republic
 Denmark
 Dominica
 Ecuador
 Egypt
 Estonia
 Faroe Islands
 Finland
 France
 Georgia
 Germany
 Ghana
 Greece
 Grenada
 Hong Kong
 Hungary
 Iceland
 India
 Indonesia
 Iran, Islamic Republic of
 Ireland
 Israel
 Italy
 Jamaica
 Japan
 Kazakhstan
 Korea, Republic of
 Kuwait
 Kyrgyzstan
 Latvia
 Liechtenstein
 Lithuania
 Luxembourg
 Macedonia
 Malaysia
 Malta
 Mexico
 Moldova, Republic of
 Mongolia
 Montenegro
 Montserrat
 Morocco
 Netherlands
 New Zealand
 Norway
 Pakistan
 Peru (Mar 2014)
 Philippines
 Poland
 Portugal
 Qatar
 Romania
 Russian Federation
 Saint Kitts and Nevis
 Saint Lucia
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sri Lanka
 Sweden
 Tajikistan
 Thailand
 Trinidad and Tobago
 Tunisia
 Turkey
 Turkmenistan (Dec 2013)
 Ukraine
 United Arab Emirates
 United Kingdom
 United States
 Uruguay
 Uzbekistan
 Venezuela
 Vietnam

There are also several agreements between Switzerland and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Argentina (Mar 2014)
 Australia (Jul 2013)
 China (Sep 2013)
 Hungary (Sep 2013)
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

There are also several agreements between Switzerland and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Andorra (Mar 2014)
 Guernsey (Sep 2013)
 Isle of Man (Aug 2013)
 Jersey (Sep 2013)
 San Marino (May 2014)
 Seychelles (May 2014)

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Switzerland didn't sign the automatic information exchange agreement but made a commitment to start the automatic information exchange in September 2018.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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Swiss Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2014-2015, financial market development in Switzerland is scored 5.300 out of maximum 7.000 and ranked 11th out of 144 analysed economies. Soundness of banks is scored 5.900 bringing Switzerland into the 21st place, trustworthiness and confidence of financial market is scored 5.700 (11th place).

Financial Market Development in Switzerland.
Chart 5. Financial Market Development in Switzerland.Source: WEF.
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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 Group 1
Economic risk 1
    Economic resilience very low
     Economic imbalances very low
    Credit risk in economy low
Industry risk 2
    Institutional framework low
    Competitive dynamics low
    Systemwide funding very low
Government support assessment supportive

Table 2. BICRA for Switzerland. Source: S&P's.

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Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Switzerland are summarised in Table 3.

Scheme Participantsall credit institutions operating in Switzerland (including branches of foreign banks), branches of Swiss banks abroad
Eligible Depositorsprivate individuals, commercial enterprises and public-sector offices
Covered Accountscredit balances (e.g. personal accounts, savings accounts, investment accounts, salary accounts, numbered accounts, deposit accounts and current accounts)
Covered Currenciesall
Maximum Protected Amount100 000 CHF
Paid In CurrencyCHF

Table 3. Deposit guarantee scheme in Switzerland.

Further Information:
Deposit Guarantee Schemes in Europe

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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).

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Banking Sector Structure

Currently there are 282 credit institutions operating in Switzerland.

Recent structural changes (2011 - 2014) of the banking sector of Switzerland are summarised in Table 4.

2011201220132014
Number of Opened Banks2211
Number of Closed Banks017168

Table 4. Recent structural changes in the banking sector of Switzerland.

All the credit institutions operating in Switzerland can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Big banks2
Branches of foreign banks26
Cantonal banks24
Central banks1
Institutions with a special field of business6
Other banks / Banks that specialise in stock exchange, securities and asset management business48
Other banks / Foreign-controlled banks91
Other banks / Other banking institutions13
Private bankers / Private bankers who do not actively seek deposits from the public7
Raiffeisen banks1
Regional banks and savings banks / Other regional banks and savings banks27
Regional banks and savings banks / RBA Holding banks36

Table 5. Number of banks by category in Switzerland.

The list of the most recently opened banks in Switzerland is provided in Table 6.

NameStart Date
 Banque du Léman SA (new)January 2014
 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 6. The most recently opened banks in Switzerland.

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