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FT 18 SEP 93 / FT Guide For The Serious Investor (6): Swiss mystique fades
By IAN RODGER
NO DOUBT a Swiss bank account still has a cachet all of its own. But as with
many hoary traditional things, the reality no longer coincides with the
myth.
There has ceased to be any point in having a Swiss numbered account operated
anonymously for you by a lawyer, for example. Swiss law requires that a bank
know the identity of the beneficial owner of all its accounts.
It also requires that the bank disclose the identity in the event of
criminal inquiries, and it authorises bank directors to inform the
authorities if they are suspicious that the account is being used for
something illegal. (The Swiss are now discussing making this latter practice
obligatory.)
Some Swiss banks now play down the importance of secrecy in marketing their
services to high net worth individuals.
And that leads to a second misapprehension among potential clients. Time was
that Swiss banks actually charged foreigners a fee on deposits - in other
words, a negative interest rate. No longer. They are now as eager to attract
deposits as any other bank, and pay reasonable interest rates, too.
So why bother having a Swiss bank account?
In general, there is not much of a case for it. If you have frequent
business in Switzerland or in Swiss francs, then a Swiss franc account will
undoubtedly be useful. But these days, most international banks will offer
accounts in all major currencies, so there is no obvious need to go to a
Swiss bank.
And even if you spend a lot of time in Switzerland, it may not be wise to
put your money in a Swiss franc account. The Swiss franc also has a slightly
outdated reputation for being firm and stable. Although it is going through
a good patch at the moment, its performance in the past decade has been
among the least impressive of major currencies.
If you are thinking of stuffing some money away for retirement, then
certainly the big Swiss banks are among the strongest in the world. Indeed,
among the world's top 15 banks, Union Bank of Switzerland has by far the
best tier one capital ratio (7 per cent).
However, even though they pay reasonable interest rates, the banks are
obliged to extract a 35 per cent withholding tax from earned interest.
Switzerland has double taxation treaties with most countries so you can get
it back, but it is a nuisance.
A secondary, but nevertheless important, consideration is that the Swiss are
still extremely careful and competent bankers. One does not need to worry
about funds being misplaced or transfers going astray when dealing with
them.
Finally, even though bank secrecy has eroded considerably, the Swiss still
cling tenaciously to a few elements of it. They will not co-operate at all
with foreign governments' tax investigations, and they will not help an
ex-spouse trying to get his or her share of a family fortune.
For most people, however, these considerations do not apply. Thus, to get
the best of Swiss banking without the possible disadvantages, it might be
best to take out an account with a reputable Swiss bank in your home
currency and in your home country.
Countries:-
CHZ Switzerland, West Europe.
Industries:-
P6081 Foreign Banking and Branches and Agencies.
P6282 Investment Advice.
Types:-
CMMT Comment & Analysis.
The Financial Times
London Page VIII