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The online magazine of the Swiss Bankers Association
2014/07/04 00:00:00 GMT+2

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Securing EU market access: a potential sectoral integration agreement with the EU under review

Securing EU market access: a potential sectoral integration agreement with the EU under review

The banks in Switzerland want to be part of a successful, globally leading financial centre. In order to achieve this, they require framework conditions that allow them to foster client relationships as well as to enter into new markets and acquire new clients. In order to secure market access to the EU, they wish to conduct a swift examination of the costs and benefits of a sectoral integration agreement with the EU.

One of the strengths of the Swiss banking business has always been the strong focus on clients abroad. Asset management clients in particular have been serviced cross-border for decades. As a result, the financial centre has gained a reputation as a leading centre of competence for private banking. Multilingualism, a focus on service, and political and economic stability have contributed to the quality of the Swiss financial centre in the past and continue to do so today.

EU market access is strategically important

EU market access is coming under increased pressure as a result of protectionist tendencies toward vertical foreclosure. In some cases, it has already become impossible to actively serve clients in certain EU countries from Switzerland. Due to its size and geographic as well as cultural proximity, the EU remains attractive, despite its current low growth momentum.

EU market access is coming under increased pressure.

In its interim report on market access of 1 May 2014, the Brunetti Expert Group II, appointed by the Swiss government, recommended that the legal and political, as well as the economic consequences of a sectoral integration agreement with the EU for financial services be analysed and the feasibility thereof be clarified. The Swiss Bankers Association (SBA) shares this view and agrees with the recommendations made by the experts.

A political decision requires support from the industry

The board of directors (BoD) of the SBA has also come to the conclusion that a sectoral integration agreement with the EU should undergo swift examination and if appropriate, should be initialised, in order to secure market access to the EU markets longer-term. All of the banks agree that in light of such a far-reaching decision, the costs and benefits, as well as the political and legal consequences, should be examined in an open and unbiased manner. The BoD has therefore, independently of the Brunetti Expert Group II, decided that an in-depth evaluation of the costs and benefits of EU market access should be conducted from a banking industry perspective. The results of the study are expected to be available in the fall.

The results of the study are expected to be available in the fall.

The BoD will then make a political assessment based on the facts that have been analysed. The cost-benefit analysis will be an important criterion in the decision-making, but not the only one. A clear industry position is important, not least because reaching a sectoral integration agreement with the EU is an important political project that, although it requires the support of the affected sectors and circles, will ultimately have to be decided within the scope of Switzerland’s European policy.

Negotiating market access bilaterally for the near-term

Negotiating a sectoral integration agreement with the EU is a lengthy and difficult undertaking both materially and politically. We should make no mistake on the matter: in the best case scenario, a sectoral integration agreement could bear the desired fruit in five to ten years. But the banks need legal certainty for their business policies now.

The BoD will then make a political assessment based on the facts that have been analysed.

They cannot and do not wish to wait patiently in uncertainty for years to come. If banks can no longer serve their clients from Switzerland, some will explore whether or not they can better serve their clients locally, which could result in decisions pertaining to location that have negative consequences for the Swiss financial centre. It is therefore important to use the time at hand to negotiate market access bilaterally with the key EU partner countries, regardless of the in-depth examination of a sectoral integration agreement with the EU. This applies in particular to the important key markets France and Italy.