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Martin Hess Association suisse des banquiers

“A l’avenir également, la Suisse pourra figurer parmi les principales places financières mondiales”

Martin Hess
Martin Hess
Martin Hess, responsable Politique économique de l’Association suisse des banquiers, s’exprime sur l’avenir de la place financière suisse.

Un fort vent contraire souffle depuis longtemps sur les banques suisses – du point de vue tant économique que réglementaire. Martin Hess, responsable Politique économique de l’Association suisse des banquiers, s’exprime sur les conséquences de l’abandon du taux plancher EUR/CHF par la BNS, sur la problématique actuelle des taux d’intérêt négatifs et sur d’autres thèmes concernant le secteur.

Interview avec Martin Hess (en anglais) réalisée par KPMG Suisse :

“Switzerland will be able to play a prominent role among the world’s top financial centers in the future, as well”

Martin Hess, Head of Economic Policy at the Swiss Bankers Association, talks about the future of Switzerland as a financial center.

What are the biggest issues currently facing banks in Switzerland?

We spent years focusing on resolving shortcomings that came to light during the financial crisis. Banks are now trying to get back into shape so that they can boost their profitability and adapt their services to meet the needs of clients in the digital age. One vital aspect of this is that the authorities also need to recognize the signs of the times and shift their attention back to Switzerland’s attractiveness as a financial center. The Brunetti report’s recommendations give them the perfect opportunity to do just that. Dialog with banks must now be aimed at increasing the efficiency of regulations, creating an advantageous fiscal environment and safeguarding access to the European market. The Swiss Federal Council’s decision to refrain from imposing a capital gains tax is a good start.

How are private banks dealing with the SNB’s unexpected decision to scrap the minimum exchange rate?

Both negative interest rates and the strong Swiss franc are exacting their toll and have come at a time when some banks are not generating enough of a profit. It’s clear that efforts are being made to minimize the costs associated with holding excess liquidity. Realizing cost cutting and efficiency boosting potential is a perennial topic regardless of the SNB’s decision. These issues are now being tackled even more systematically, however. In that regard, the SNB’s decision is contributing toward accelerated consolidation within the sector, as well.

What influence does the negative interest rate have on private banks in Switzerland?

Over a billion Swiss francs are flowing from banks to the SNB as a result and the impact on private banks is disproportionately high. Yet its influence extends far beyond just these immediate costs and affects all groups of banks. The increased risks lead to additional hedging costs and encourage increased liquidity reserves. Costs also arise in conjunction with low bond interest rates, for instance. Since positive, high-quality yields can only be achieved through long maturities, increasing terms to maturity translate into a loss of earnings because those funds cannot be reinvested during that time.

Which business model will be successful in the future?

There won’t be any ultimate business model in the future, either. The diversity offered by different types of banks is good for Switzerland as a financial center. An ability to adapt to new regulations and swiftly adopt new technologies in order to efficiently provide the services their clients demand will be indispensable for all banks. This flexibility is pivotal if banks are to grow stronger through the ongoing industrialization process rather than falling victim to it. The process will first manifest itself through an upheaval in the value chain. While the vertical integration at traditional European banks is currently at 80%, there’s no reason not to expect it to fall to 30% like in the auto industry.

If we take a look abroad: How are banks in the USA, Europe and Asia dealing with the current situation and increasing regulation?

Since banks are subject to a multitude of special legal provisions in nearly every country, they have practically no way of avoiding growing regulation. Yet when it comes to FinTech, we can see that competitors like London, Singapore and New York are a few years ahead of Switzerland. FinTech lays the cornerstone for banks’ ability to develop efficient in-house processes and address clients’ rapidly changing needs. Demand is currently reacting strongly to banks’ increasingly costly and complex financial intermediation by switching to other markets that seem more cost effective and efficient. These include bank-like entities such as hedge funds, money market funds, special stock brokers and other investment vehicles. According to the Financial Stability Board, this increase has led to a situation in which the world’s shadow banks already account for more than half of the balance sheet total of all banks combined.

Generally speaking, what kind of future do you predict for Switzerland as a financial center?

The financial crisis and subsequent regulation have been at the center of attention until just recently. Looking ahead, though, there’s no a priori reason anymore why Switzerland shouldn’t continue to play a prominent role among the world’s top financial centers in the future, as well. Global wealth keeps rising, the country’s background as the world’s largest manager of foreign assets is excellent and we have the right talent on hand. That means we’re the only ones who could shoot ourselves in the foot. Stagnating growth rates for foreign assets are enough of a warning. If you ask me, refusing to accept the realities of the future would present the biggest risk. Market players and authorities need to acknowledge the successful paradigm shift and continue moving forward. For reasons of profitability, banks will have no choice but to implement a systematic digitalization strategy. The authorities need to become keenly aware of the pivotal importance of FinTech. They should serve as a straightforward contact for the industry while refraining from erecting any unnecessary obstacles on the path to the future. All in all, I’m confident that banks will continue to play a key role in Switzerland’s prosperity.

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Lundi 4 Mai 2015