SwissBanking
The online magazine of the Swiss Bankers Association
June 28, 2020

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From the banks’ perspective, the “termination initiative” should be rejected

From the banks’ perspective, the “termination initiative” should be rejected

On 27 September 2020, the “termination initiative” will be put to the vote in Switzerland. The popular initiative aims to end the free movement of persons between Switzerland and the EU. If it is accepted, it will result in the termination of agreements that are important for the economy. The Swiss Bankers Association (SBA) explicitly rejects this radical popular initiative.

Even outside the political arena, which with the exception of the Swiss People’s Party (SVP) has rejected the popular initiative, opposition to the so-called termination initiative predominates. Well-known business and scientific as well as civil society organisations reject the initiative and are campaigning for a “No” vote on 27 September 2020. The SBA fully endorses the arguments put forward by these groups on this issue. There is also a lot at stake for the banking sector.

What would the consequences be for banks if the termination initiative were to be accepted?

The bilateral approach gives the Swiss economy privileged access to the European single market, the most important export market for the Swiss economy, despite the fact that Switzerland is not an EU member. If the termination initiative is accepted, the Bilateral Agreements I would be terminated, thus destroying the core of Switzerland’s bilateral path with the European Union. This would jeopardise the prosperity and freedoms of Swiss citizens.

The Bilateral Agreements I have helped Switzerland to achieve stable economic development over the last 18 years. They must be safeguarded and continuously expanded. As part of the overall economy, this is also essential for the banks – regardless of whether they conduct business abroad or not.

Private banking and asset management in particular are important pillars of the Swiss financial centre. They make a significant contribution to value creation in the overall economy. In the areas of asset management and investment advisory services, a large proportion of Swiss banks are export-oriented and play an important global role. In the highly competitive international environment between major financial centres, customers in the EU currently entrust banks in Switzerland with the management of around CHF 1,000 billion. This figure shows the strong interest in these financial services provided out of Switzerland, which are considered to be of high quality.

The younger generation of clients in particular wants our banks to provide active advisory services across national borders. At present, however, there is a lack of corresponding agreements with the EU that ensure proper market access. Acceptance of the termination initiative and the resulting threat to the bilateral path would severely dampen the prospects for urgently needed improvements in market access to the EU for banks in Switzerland. This must be avoided if this important business is to remain in Switzerland.

What is at stake?

As one of the key global financial centres, the importance of the Swiss banks’ international asset management and investment advisory business with customers in the EU is important for Switzerland and must be safeguarded. The foreseeable erosion of relations with the EU as a result of the adoption of the popular initiative risks hitting this business hard. The export business, which is important to Switzerland, would shrink accordingly. Negative effects on value creation, jobs and tax revenues in the Swiss financial centre would be unavoidable. Moreover, the exportability of the Swiss financial centre's sustainability expertise would also be acutely jeopardised if the popular initiative were to be accepted.