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The Swiss banking centre

Accounting for 5 percent of value creation in Switzerland in 2016, the Swiss banking centre is the source of an important share of value creation in an economic environment that has remained challenging for many years. It is therefore an important contributor to the prosperity of the entire Swiss population.

The Swiss banking sector is characterised by its large variety of banking institutions with differing business models, and offers a broad spectrum of services. At the end of 2016 there were 261 banks operating in Switzerland, five less than the previous year.

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The main reason for this change is the reduction in the number of foreign banks. With the founding of Credit Suisse (Schweiz) AG as a wholly owned subsidiary of Credit Suisse AG, a new institution was added to the group of big banks. One bank in the private bankers group was reallocated and is now in the group of stock exchange banks. The Swiss National Bank (SNB) now divides the banks into eight bank groups, according to their characteristics and activities.

The banks in Switzerland are facing major challenges: rising regulatory costs, negative interest rates, shrinking margins, increasing customer demands, digitalisation, political and legal uncertainties during the Brexit negotiations as well as uncertainty regarding the future policies of the US. The ongoing decline in margins and the digitalisation of the financial sector will continue to drive structural realignment in the banking sector in the coming years.

The banks are addressing these challenges and are succeeding in their efforts to develop robustly in this uncertain Environment.

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Operating net income

Aggregate operating net income was CHF 62.5 bn (-3.2%) in 2016.

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In 2016, 226 of the 261 banks in Switzerland reported an annual profit. Their total annual profit amounted to CHF 11.8 bn and was therefore CHF 7.8 bn lower than in the previous year (-39.8%). It should be noted here that the high extraordinary income generated by a big bank resulting from a group-internal divestiture totalling CHF 10.7 billion had a major impact on last year’s result. The losses generated by the unprofitable institutions increased slightly, by CHF 0.1 bn to CHF 3.9 bn (+2.6%). The aggregate annual profit for the sector therefore totalled CHF 7.9 bn.

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Since 2009, the share of net income attributable to the big banks has been between 46 and 51 percent, and is therefore substantially higher than the shares of the remaining bank groups. In order to better illustrate the trend for the remaining bank groups, the developments in the share of net income of the big banks is not included in this figure.

Balance sheet business and employment at the banks in Switzerland

The aggregate balance sheet total of all the banks in Switzerland rose by CHF 74.7 bn to CHF 3,100.8 bn in 2016. The SNB’s currency interventions have impacted the breakdown of assets of commercial banks. The banks’ sight deposits at the SNB have been rising continuously since the introduction of the minimum exchange rate in the autumn of 2011. Notwithstanding the introduction of negative interest rates and the lifting of the minimum euro exchange rate, the banks in Switzerland continue to fulfil their function as lenders and financing partners to the full extent.

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Employment in Switzerland’s banks

In full-time equivalents, the number of employees at the banks in Switzerland amounted to 101,382 in 2016. This corresponds to a total decrease across all banks of 1,660 jobs (-1.6%) compared to the previous year. The big banks, cantonal banks, private bankers, “other banking institutions” and foreign banks cut 2,142 jobs in 2016. The biggest share of the decline in staff levels is attributable to the big banks, which reported job reductions of 1,253 (-3.6%) to their workforce. They were followed by the foreign banks, which recorded a decrease of 647 jobs (-4.2%). The cantonal banks reduced their workforce by 66 jobs (-0.4%), the private bankers by 93 jobs (-4.2%) and the “other banking institutions” by 84 jobs (-1.1%). Regional banks and savings banks, and the Raiffeisen and stock exchange banks created a total of 483 additional jobs in 2016. The strongest growth was reported by the stock exchange banks with 413 jobs (+3.3%). The Raiffeisen banks created 61 additional jobs (+0.7%), and staff levels increased by nine new jobs (+0.2%) at the regional banks and savings Banks.

The annual SBA employment survey on employment trends at the banks shows a slight reduction in employment in Switzerland for the first half of 2017. The number of jobs declined from 88,006 to 87,035 between the end of 2016 and June 2017.

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Staff levels in Switzerland (Source: SBA employment survey 2016)

63.9 percent of respondent banks expect employment levels to remain unchanged in the second half of 2017, which corresponds to a decrease of 3.4 percentage points compared to the 2016 survey. 24.7 percent of survey participants expect staff levels to rise in Switzerland and 11.4 percent expect to see lower levels.

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According to SECO, the average unemployment rate in the Swiss banking sector was 2.8 percent in 2016. It was thus half a percentage point below the figure for the overall economy, which was 3.3 percent, and is therefore comparatively low. Overall, an annual average of 3,821 registered unemployed people in the banking sector was reported for 2016, which corresponds to an increase of 155 compared to 2015. Considering the major challenges faced by the banks, the labour market continues to be highly robust.

According to the monthly statistics of the State Secretariat for Economic Affairs (SECO), the unemployment rate in the banking sector in the first half of 2017 was unchanged compared to December 2016 and remained at 2.8 percent. The unemployment rate was therefore still below the national Swiss average of 3.0 percent in June, even though the latter has dropped since December 2016.

Wealth management

The banks in Switzerland managed total assets of CHF 6,650.8 bn at the end of 2016, which corresponds to an increase of CHF 83.0 bn (+1.3%) compared to the previous year. The share of foreign customer assets decreased slightly from 49.3 percent to 48.2 percent. Switzerland remains the global market leader for cross-border private banking: around one-quarter of cross-border assets managed globally are managed in Switzerland.

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