Swiss bankers are on the defensive with their secretive industry under sustained attack for sheltering tax dodgers. Some cannot travel abroad for fear of arrest in tax investigations.
But the fur coats and expensive cars on display around the Paradeplatz square at the heart of Zurich’s financial district - as well as booming house prices — tell a different story: business is good in a city now ranked the world’s costliest.
Zurich overtook Tokyo as most expensive according to a new ranking by the Economist Intelligence Unit because of the soaring Swiss franc. The currency is up 30 percent since 2008, despite a cap imposed last year by the central bank, because investors view it as a safe haven in global economic turmoil.
The same factors make the country’s banks attractive despite the gradual erosion of bank secrecy: political stability and neutrality, low government debt and an economy which has been relatively resilient through the financial crisis.
Although Swiss banks - especially the country’s biggest UBS - have shared in the pain of the crisis, they have retained an image for solidity, particularly in contrast to their euro zone rivals, bolstered by new capital rules that are the world’s strictest.
The swelling ranks of Chinese and Indian millionaires who have developed a taste for Swiss luxury watches are also drawn by the country’s quality-seal when it comes to banking their new wealth, helping to replace U.S. and European tax exile clients.
Figures published in recent weeks show that six of the biggest Swiss banks together pulled in net new client assets of more than 100 billion Swiss francs in 2011.
“Switzerland PLC remains a hugely popular global epicentre of wealth. Clearly in the global environment of the last 12-24 months people have been looking for safekeeping,” said Sebastian Dovey of wealth management consultancy Scorpio Partnership.
“Net new assets might reflect a positive mood from 12 months ago. Will we see a similar strength in 12 months time? I suggest we probably will,” Dovey added.
While Singapore and London are also doing well, Dovey noted Switzerland has defended its position as the biggest centre of offshore wealth. It remains the top choice for investors in Asia even if Singapore might overtake it in a decade.