SwissBanking
The online magazine of the Swiss Bankers Association
October 01, 2020

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Dear Reader

Dear Reader

Our banks are a stable pillar of the economic system, a fact which was underscored during the corona crisis. With their active and significant contribution to the creation and implementation of the SME loan programme, Swiss banks have proved that they support their customers, even in difficult times.
Herbert J. Scheidt
by Herbert J. Scheidt, Chairman

Over 136,000 Swiss companies received direct financial assistance in the form of liquidity from the corona loan programme that was supplied to them in a swift and in a straightforward manner by the banks. In the coming months and years, banks will continue to assume their responsibilities: together with its members, the Swiss Bankers Association has developed recommendations to prevent company insolvencies from arising due to the corona crisis where possible. You can read more about this here.

This year's Banking Barometer once again highlights the key importance of corporate banking for companies in this country: in 2019, banks in Switzerland had outstanding loans of CHF 607 bn to companies in Switzerland and abroad. More than half of these loans were granted to micro-enterprises – companies with up to nine employees. Over the past decade, the volume of corporate loans has grown around 3.5 times as quickly as the Swiss economy. This highlights the importance of this form of financing, which you can read about in the article on corporate banking.

However, the Swiss Bankers Association still sees areas where Switzerland needs to catch up: for example, withholding tax is a long-standing issue for which a solution must still be found. Compared with other major financial centres such as the UK, the US, Singapore and Hong Kong, the market for Swiss investment products is, unfortunately, underdeveloped. Because other countries are not subject to withholding tax, many products are issued abroad instead of in Switzerland. To remain competitive, Swiss companies also take this approach. Although investors could, in most cases, reclaim Swiss withholding tax, doing so is a long and complicated process.

The SBA therefore supports a reform of withholding tax to make the capital market more attractive. Now that the consultation process has been completed, the ball is in the court of the Federal Council, which is currently drafting a proposal with a focus on providing a smart solution. You can read more about this here.

I wish you an enjoyable read.