The importance of the Swiss banking sector by liaoqinmei


									August 2012

The importance of the Swiss banking sector
An economic perspective

                          The importance of the Swiss banking sector – SBA – August 2012   1
The importance of the Swiss
banking sector

Executive Summary                                             5

1     The banking sector as part of the economy               7

2     Direct economic importance of the banking sector        9

2.1   Value added                                             9

2.2   Employment                                             12

2.3   Taxes                                                  13

3     The importance of the banking sector for other areas   14

3.1   Value added                                            15

3.2   Employment                                             16

4     Conclusion                                             18
Executive summary

        The Swiss banking sector has seen some extremely dynamic changes to economic and
        regulatory conditions in recent years. Banks as well as the authorities are confronting the
        challenges this raises each and every day – a task made all the more difficult by the fraught
        global economic and political environment. This, in turn, puts the public spotlight on the
        banking sector: not only because it is so important to the Swiss economy, but also because
        it occupies a leading international position in a variety of business areas.

        This study provides an overview of the economic importance of the Swiss banking sector
        and its significance for other economic sectors. The analyses are based on calculations per-
        formed by BAKBASEL, which were commissioned by the Swiss Bankers Association (SBA).
        According to BAKBASEL‘s findings, in the past 20 years the banking sector made the largest
        contribution to Swiss economic growth of all sectors of the economy. At 6.1% of gross value
        added in 2011, the share of gross value added of banks is slightly down on previous years.
        However, the benefit they create for other economic sectors remains high, since a thriv-
        ing banking sector is an important consumer of goods and services. This interconnectivity
        means that for every 100 bank employees, another 115 jobs are created in other sectors by
        indirect effects. Alongside the CHF 32.4 billion generated by the Swiss banking sector, the
        indirect effects of this contribute an additional CHF 17 billion of value added, leading to a
        total 9.3% share of Swiss overall economy.

        In the years leading up to 2020, the value added created by the banking sector should grow
        at 1.9%, roughly the same rate as the economy as a whole. Growth could dip in 2012 and
        2013 due to the adaptions to new framework conditions, before picking up little by little as
        the end of the forecast horizon approaches. Accordingly, the banking sector‘s share of gross
        value added should be almost 6%. The share of the entire financial sector (banks, insurance
        and other financial service providers) will likely amount to 11.5% by 2020. This level can be
        achieved despite a slight dip in employment by increasing efficiency in service provision.


                                                The importance of the Swiss banking sector – SBA – August 2012   5
                                      As Figure 0-1 shows, employment is likely to fall slightly as of the current year and then re-
                                      main broadly constant, while gross value added will increase moderately.

                                      0-1 Gross value added and employment in the banking sector
                                      CHF bn                                                                                                                                                     employees

                                      45                                                                                                                                                              145 000
                                      40                                                                                                                                                              140 000
                                      35                                                                                                                                                              135 000
                                      30                                                                                                                                                              130 000
                                      25                                                                                                                                                              125 000
                                      20                                                                                                                                                              120 000
                                      15                                                                                                                                                              115 000
                                      10                                                                                                                                                              110 000
                                       5                                                                                                                                                              105 000
                                       0                                                                                                                                                              100 000





















                                                         Gross value added                                                                                                       Employment

                                      Note: The dashed line indicates the forecast trend.
                                      Source: BAKBASEL

                                      Various analyses of late have shown that margins in banking will continue to fall in the future.
                                      In order to compensate for this, the framework conditions need to be improved such that
                                      additional services can be offered from Switzerland. Otherwise, more extensive headcount
                                      adjustments would appear unavoidable. The figures show that a decline in the business ac-
                                      tivity at banks would have painful consequences for other areas of the economy. Banks and
                                      authorities are therefore called upon to develop promising strategies and to create optimal
                                      framework conditions in the interests of the overall economy.

6   The importance of the Swiss banking sector – SBA – August 2012
1 The banking sector as part
of the economy

Banking services are vital   A well-functioning financial system underpins every prospering economy. It assumes the
for economic development     important role of providing financial services to businesses and the population as a whole.
                             In addition to ensuring money supply, this also includes asset management, bank advisory
                             services and transaction processing for large companies.

Favourable financing         Alongside the generous supply of credit – which experienced no restrictions during the last
conditions for business      financial crisis – Switzerland as a business location benefits from internationally favourable
                             financing conditions. This is due not only to generally low interest rates, but also to banks’
                             low margins. Empirical studies show that an ample supply of credit has a long-term impact
                             on economic development.

SMEs are the largest         For many companies in Switzerland, bank loans remain the most important form of finan-
consumers of credit          cing. Small and medium-sized enterprises (SMEs) are especially reliant on this type of fi-
                             nancing, since they are too small to access the capital markets. Loans to SMEs account
                             for almost 85% of all business loans in Switzerland (based on volume). At end-2011, this
                             amounted to CHF 260 billion (of a total of CHF 307 billion in outstanding loans). Of this
                             amount, CHF 187 billion (or roughly 70%) of business loans were issued to companies with
                             no more than nine employees. However, according to a survey by SECO, only around one-
                             third of SMEs has a bank loan.

Multinational companies      Alongside these important functions for SMEs, the Swiss banking sector also offers services
benefit from banking         that cater for the special financing requirements of multinational companies. Multinationals
services in Switzerland      use services in the areas of payments, foreign exchange, securities and institutional asset
                             management and are important clients for the credit business, export financing, and re-
                             structurings and takeovers. What is more, many multinational groups process their treasury
                             management via banks in Switzerland. Syndicated loans are an important source of funding
                             for large companies.

Banks are drivers            The banking sector has seen above-average growth in recent decades, and its high value
of growth                    added has made it the growth driver of the Swiss economy. Over the last 20 years, however,
                             the banking sector has grown significantly faster than the overall economy, at an annual
                             increase of 2.4%. During the global financial crisis in 2008 and 2009, however, the Swiss
                             banking sector‘s real gross value added fell by 10%. This negative development during the
                             crisis years caused value added to decline by an average of 0.3 percentage points per year
                             from 2000 to 2011.

                                                                     The importance of the Swiss banking sector – SBA – August 2012   7
                                       1-1 Contribution of the nancial sector to real GDP growth in Switzerland
                                       Average growth 2000 – 2011
                                       12%                                                                                                          0.4%

                                                  Other financial                                                   Construction and             Ø Contribution
                                                  service providers                                                real estate                    to growth
                                                                               Liberalised                                                       2000 –2011
                                                                               sectors           Retail
                                                  Banks 1990 –2011
                                                                                services     Financial sector          Political sector
                                                                       Banks 2000–2011
                                             0%                       5%                   10%                   15%                      20%                    25%
                                                                                   Share of total economy 2011
                                       Source: BAKBASEL

Improvement necessary                  In order to successfully respond to the ongoing fall in margins in the banking sector, the
in framework conditions                framework conditions need to be improved such that additional services can be offered
                                       from Switzerland, which will have a positive knock-on effect on business volumes. The qual-
                                       ity of the available workforce and capacity for innovation will be decisive factors here over
                                       the long term, both for business and for the banking sector. The resources of both eco-
                                       nomic sectors – banking and real economy – should therefore be pooled and not played
                                       off against one another. What needs promoting is not real economy or banking, but Swit-
                                       zerland as a business location and a centre of innovation and research. This will enable
                                       Switzerland to maintain its top position among international locations over the long term.

8    The importance of the Swiss banking sector – SBA – August 2012
2 Direct economic importance
of the banking sector

2.1                     Value added
Banks are key driver    By ensuring the supply of money and providing services such as wealth management, con-
of economy              sulting and transaction processing for large companies, banks create key added value for
                        the economy during their production process. Added value is the difference between value
                        of production and the inputs used to produce goods and services. Gross value added meas-
                        ures the amount that is available for salaries and wages, financial capital, profit and interest
                        on loans excluding gross margins of banks and after write-downs on physical capital.

                        Over an extended period, the Swiss banking sector has grown significantly above the sector
                        average. Between 1990 and 2011, real value added increased by an average of 2.4% per year,
                        compared with an annual growth rate of around 1.6% for the overall economy.

Correction due to the   During the global financial crisis in 2008 and 2009, the Swiss banking sector‘s real value
financial crisis        added fell by 10%. In a time of rapid global economic change, more stringent regulatory
                        conditions and protectionist tendencies have amplified the challenges facing banks on a
                        broad front, while rising risk premiums and falling margins have hampered their earnings
                        power. The adverse developments triggered since the crisis broke out in 2007 caused value
                        added in the banking sector to decline by an average of 0.3 percentage points per year from
                        2000 to 2011. What is striking here is the rapid growth of other financial service providers
                        during this period, which today account for around 10% of the financial sector. These in-
                        clude independent asset managers or stock exchanges and securities dealers. The reasons
                        for this significant growth lie in the settling of new hedge funds, outsourced insurance
                        activities and higher share prices.

                                                                 The importance of the Swiss banking sector – SBA – August 2012   9
                                     2-1 Real gross value added in the nancial sector
                                     Average growth 2000 –2011




                                                        -0.3%                                            -0.3%
                                                        Banks                                            Insurers                            Other financial                      Financial sector            Overall economy
                                                                                                                                             service providers
                                     Source: BAKBASEL

Development of banking               With the value added of its banks stagnating, Switzerland has lagged behind its competi-
sector abroad is more                tor locations in Europe and overseas over the last decade (see Figure 2-2). Note, however,
dynamic                              that most other financial centres enjoy a massive level of state involvement, which puts the
                                     modest development of Swiss banks during this economically difficult observation period
                                     in context.

                                     2-2 Real gross value added in the nancial sector compared with international peers
                                     Uniform currency basis (adjusted for purchasing power parity) 2000–2011











                                                                               United Kingdom













                                                                                                                    New York

                                     Source: BAKBASEL

                                     Banks in Switzerland have made an active effort to reduce the pressure on costs and mar-
                                     gins in their various business areas. In spite of the challenging international environment,
                                     this led to profits of around CHF 13.5 billion in 2011, almost equalling the prior-year result.
                                     The banking sector generated gross value added of CHF 32.4 billion, equivalent to 6.1% of
                                     Switzerland‘s gross value added. Figure 2-3 shows that this share has gradually fallen since
                                     its 2000 level of 8.9%.

10   The importance of the Swiss banking sector – SBA – August 2012
                           2-3 Share of the overall economy’s nominal gross value added

Banking sector‘s share     15%
                                    13.1%      11.3%   11.4%     12.2%       12.1%      11.9%     12.7%     13.6%    12.6%        12.1%     11.6%     11.5%
of gross value added
                                     0.4%                                                                    1.2%
is 6.1%                    12%                                    0.8%
                                                                                                    1.0%              1.2%
                                                                              0.8%       0.9%                                      1.2%
                                     3.8%       0.6%    0.7%                                                                                 1.2%      1.2%
                           9%                   3.2%    3.7%      4.1%        4.1%       3.4%                         4.4%
                                                                                                                                   4.4%      4.0%      4.2%

                                                7.5%              7.3%        7.2%       7.6%       7.8%     8.0%     6.9%
                                                        7.1%                                                                       6.4%      6.4%      6.1%

                                    2000       2001    2002       2003       2004        2005     2006      2007      2008        2009       2010     2011
                                    Financial sector          Banks          Insurers           Other financial service providers
                           Source: BAKBASEL

                           Including insurers, the financial sector as a whole contributed 11.5% to gross value added
                           in 2011, on a par with its value added ten years ago. Figure 2-3 clearly shows the two boom
                           periods in the finance industry before the dotcom bubble burst in 2001 and the financial
                           crisis in 2008.

In future, the banking     In future, the banking sector‘s value added will grow at a similar rate to the overall economy,
sector will grow at the    at 1.9% per year. After a sluggish start given the rather unfavourable near-term environ-
same rate as the overall   ment, growth will pick up once the sector has realigned itself to the expected framework
economy                    conditions. Based on this forecast growth, the banking sector‘s contribution of value added
                           to the overall economy should remain at around 6% over the next ten years.

                           2-4 Forecast real gross value added in the nancial sector
                           Average growth 2012–2020
                                              1.9%                                           1.9%
                                                                                                                    1.8%                       1.8%



                                            Banks                Insurers                Other financial        Financial sector           Overall economy
                                                                                        service providers
                           Source: BAKBASEL

                           The sector‘s forecast development – stagnation and restructuring in the next few years,
                           then higher growth – will see banks’ share of gross value added level out at 5.7% from 2013
                           to 2015 before climbing back to today’s level.

                                                                                The importance of the Swiss banking sector – SBA – August 2012                11
2.2                                   Employment
                                      Around 146,000 people (corresponding to 108,100 full time equivalents) were employed in
                                      the banking sector in 2011, compared with 240,000 people (corresponding to 195,800 full
                                      time equivalents) in the financial sector as a whole. This is equivalent to shares of 3.1% and
                                      5.1% of the overall economy. The discrepancy between the respective shares of wealth crea-
                                      tion and employment of the overall economy is due to two factors: on the one hand, the
                                      banking sector has significantly fewer part-time positions than other sectors, which is not
                                      taken into account in the employment share figures. On the other hand, the sector is more
                                      productive than other industries. If we take full time equivalent employment as a basis, the
                                      share of the overall economy comes to 3.1%, respectively 5.7%.

                                      2-5 Share of employment in the overall economy
                                               4.9%      5.1%     5.3%      5.2%    5.2%       5.2%     5.1%      5.2%      5.2%         5.3%   5.1%   5.1%

                                      5%                          0.6%       0.6%   0.6%       0.7%                                      0.8%
                                                         0.5%                                            0.7%      0.7%      0.7%
                                                0.4%                                                                                            0.8%   0.8%

                                      4%                          1.4%       1.4%                                                        1.3%
                                                1.5%     1.5%                       1.4%       1.4%                1.3%      1.3%               1.2%
                                                                                                         1.3%                                          1.2%


                                      2%                          3.3%       3.2%                                  3.2%      3.2%        3.2%
                                                3.0%     3.1%                       3.1%       3.1%      3.1%                                   3.1%   3.1%


                                               2000      2001     2002      2003    2004       2005     2006      2007      2008         2009   2010   2011
                                               Financial sector          Banks      Insurers          Other financial service providers
                                      Source: BAKBASEL

Stable employment                     In the last decade, the workforce has increased in line with employment in the overall
                                      economy (see Figure 2-5). In this respect, the banking sector is more stable with regard to
                                      employment than value added. In terms of hours worked, however, the financial sector has
                                      significantly higher growth (18%) than the industry average for the overall economy (13%).

Efforts to reduce                     The efforts made in Switzerland to reduce the pressure on costs and margins are already
personnel expenses …                  bearing their first fruits from an economic perspective. In spite of increased regulatory re-
                                      quirements, the cost/income ratio – personnel and administrative expenses to total income
                                      – fell from 82.4% in 2008 to 68.3% by end-2011. The cost reductions did not have any impact
                                      on employment figures, which were largely unchanged versus 2010. This suggests that sav-
                                      ings in personnel expenses were primarily made in remuneration.

… will be continued                   Due to the enhanced focus on efficiency gains and given the moderate growth forecast for
going forward                         the banking sector, employment is expected to decline by 0.3% each year until 2020. These
                                      cuts will be driven primarily by measures to exploit economies of scale, for example by
                                      centralising and automating process or outsourcing them to more cost-effective locations.
                                      This is attribuable not least to the results of increased regulatory requirements banks have
                                      to cope with.

                                      Since insurers and the other areas of the financial sector are also likely to create only a few
                                      jobs, we assume that barely any additional jobs will be created in the financial sector as a
                                      whole, with an expected annual decline of 0.1% until 2020.

12    The importance of the Swiss banking sector – SBA – August 2012
                              2-6 Forecast for employment in the nancial sector
                              Average growth 2012–2020




                                                 Banks      Insurers            Other financial              Financial sector         Overall economy
                                                                               service providers
                              Source: BAKBASEL

2.3                           Taxes
Tax revenue from the          The provision of banking services brings the state substantial tax revenue. The figure for
banking sector amounted       2011 was CHF 11.2 billion, with CHF 5.2 billion or 46% of this generated by direct taxes.
to CHF 11.2 billion in 2011   These included income tax on dividends, income tax and capital tax for companies, and in-
                              come tax for employees, which at CHF 3.4 billion accounts for the lion’s share of tax receipts.
                              The amount received by the state through indirect taxes was even higher at CHF 5.9 billion
                              or 53%. This figure comprises value added tax, Swiss anticipatory tax and stamp duty. After
                              factoring in EU tax retention, state receipts totalled CHF 11.2 billion – almost 10% of the av-
                              erage tax revenue of the federal government, the cantons and the municipalities combined.

                              2-7 Tax revenue generated by activities of the banking sector, CHF bn, 2011

                              EU tax retention 0.1
                                                                                                                                Income and capital taxes 1.3
                              Value added tax 1.4

                                                                t ta

                                                                                                         t tax


                              Swiss anticipatory tax 2.7
                                                                                                                               Income tax for employees 3.4

                              Stamp Duty 1.8                                                                               Income taxes on dividends 0.5

                              Source: SBA, FDF, FTA

                              The tax revenue generated by the banking sector which is available for public remits is ex-
                              tremely high relative to its size.

                                                                          The importance of the Swiss banking sector – SBA – August 2012                13
3 The importance of the
banking sector for other areas

Economic effects                      The Swiss banking sector, in making a major contribution to overall economic performance,
greater than ascribed in              is a key driver of wealth. However, its vital role is not reflected solely in value added and em-
terms of value added                  ployment levels: the real economic importance of the banking sector is much greater, since
                                      the other sectors of the economy also benefit from the effects of the supply and demand it
                                      creates in terms of value added and employment. However, these effects are not reflected
                                      in the official statistics.

Banking sector is a                   On the supply side, a well-functioning domestic banking system creates value added for all
network sector                        economic players, which gives it the character of a network sector. The main importance of
                                      network sectors is that they generate additional benefit for other economic players through
                                      the infrastructure they provide. The better this infrastructure is set up, the more competitive
                                      the players are that use it. A well-functioning banking sector is just as important a part of a
                                      country’s infrastructure as its transportation network or power grid.

                                      3-1 Capital costs compared with international peers
                                      Modified net interest margin



                                                                       2.8% 2.8%
                                                                                             1.8%        1.6% 1.7%      1.7%          2.0%
                                                                                                                               1.5%          1.5%


                                                 Netherlands           Germany          Sweden         United Kingdom    Austria      Switzerland
                                                2000–2010           2010           2000–2010          2010
                                      Note: modified net interest margin = net interest income/credit volume
                                      Source: National central banks, OECD

Service offering benefits             Figure 3-1 shows that Swiss banks had a lower modified net interest margin in 2010 than
other sectors                         their international counterparts. Furthermore, this margin has fallen more sharply in Swit-
                                      zerland than in its peer countries versus the average of the last ten years. This low margin
                                      can be explained by the efficiency of service provision and the high level of competition.
                                      Combined with Switzerland’s already low interest rates, it gives companies a cost effective
                                      way of obtaining funding. The locational advantage enjoyed by Switzerland over its inter-
                                      national peers, which over the decades has become a major driver of the overall economy,
                                      has even increased in recent years.

14    The importance of the Swiss banking sector – SBA – August 2012
Companies benefit from     On the demand side, too, the banking sector‘s economic activity has a positive impact on
demand-side effects,       the value added, employment and income of companies in other sectors as well. These
such as …                  companies act as suppliers and fulfil demand from the banking sector and companies up-
                           stream of the entire value-added process. Naturally, supplier sectors also procure goods and
                           services from other companies, which creates added value there as well.

… demand for inputs        According to the production account of the Swiss Federal Office for Statistics, in 2010 banks
and …                      bought goods and services worth CHF 26.5 billion. More than half of the inputs relate to
                           payment streams within the sector, i.e. to input relationships between various companies
                           within the financial sector. The remaining inputs originate from other sectors, for example,
                           consultancy firms and IT service providers. A portion of the gross value added created here
                           comes from demand for services from the financial sector. But other inputs, such as for
                           building services used, also create added value further down the line, namely in the con-
                           struction industry.

... consumer spending      In addition to demand for inputs, further down the line private consumer spending by bank
by bank employees          staff also benefits other sectors of the Swiss economy. People working in the banking sec-
                           tor enjoy above-average incomes, and the provision of these consumer goods and services
                           therefore leads to high value added, employment and income in other sectors.

3.1                        Value added
Demand-side                The BAKBASEL impact analysis shows that – alongside the CHF 32.4 billion that the banking
value-added effects        sector directly contributes to overall economic performance – an additional CHF 17 billion
amount to                  of gross value added is also generated. The effective value added effect of the banking
CHF 17 billion             sector thus amounted to CHF 49.4 billion in 2011. Approximately 9.3% of overall economic
                           gross value added was therefore directly (6.1%) or indirectly (3.2%) attributable to the eco-
                           nomic activity of the banking sector.

                           3-2 Gross value added effects from production in the banking sector, 2011
                                                                                                                      Share of gross
                                                                                 Gross value added                     value added
                           Direct effects                                                CHF 32.4 bn                                6.1%
                           Indirect effects                                               CHF 6.1 bn                                1.2%
                           Induced effects                                               CHF 10.8 bn                                2.0%

                           Source: BAKBASEL

                           Indirect effects
Other sectors generated    The demand for inputs from other sectors leads to indirect value added effects in other
CHF 6.1 billion in added   sectors as a result of the economic links in overall economic production. The banking sec-
value from inputs          tor has an input ratio of 42.5%, i.e. every one million Swiss francs of income that banks
                           generate triggers CHF 425,000 of demand in other companies. Since there is a high level of
                           interconnectivity in the banking sector, companies outside the banking sector are left with
                           a comparatively small share of this. Nevertheless, the banking sector generates value added
                           of around CHF 6.1 billion in other sectors as a result of demand for inputs. This is equivalent
                           to a good 1% of Swiss overall economy.

                                                                   The importance of the Swiss banking sector – SBA – August 2012     15
                                      Induced effects
Consumer demand                       In addition to demand for inputs, other sectors also benefit from induced effects triggered
from bank employees                   by consumer demand from employees permanently employed in the banking sector or
generates                             from expatriates. In the case of expatriates, traditional forms of consumer expenditure are
CHF 10.8 billion                      supplemented by services such as relocating, assistance in finding accommodation, sale/
                                      rental of real estate, tax advice, procurement of work permits, integration services (e.g. lan-
                                      guage courses), etc. Furthermore, international workers are important sources of demand
                                      for international schooling, private teachers and au pairs. Through sector interconnectivity,
                                      this creates gross value added of CHF 10.8 billion in areas outside the banking sector.

                                      The reason why this figure is relatively high is due to the fact that employees in the banking
                                      sector have especially high purchasing power and specific consumer wishes. If we consider
                                      the contribution made by the individual areas within the financial sector, it becomes clear
                                      that the banking sector has an above-average share in the overall effect, especially in the
                                      case of direct and directly induced effects.

3.2                                   Employment
Indirect effects are                  Around 146,000 people were employed in the banking sector at end-2011, and indirect and
crucial to employment                 induced effects created an additional 168,000 jobs in other sectors. The Swiss banking sec-
                                      tor therefore created employment for some 313,000 people – equivalent to about 6.6% of
                                      all employed people in Switzerland.

                                      3-3 Employment effects from banking sector production, 2011
                                                                                                                       Share of total
                                                                                                   Employment          employment
                                      Direct effects                                                  146,000                   3.1%
                                      Indirect effects                                                 63,000                   1.3%
                                      Induced effects                                                 105,000                   2.2%

                                      Source: BAKBASEL

Additional jobs created               The number of people employed in the banking sector has decreased slightly compared
in other sectors                      with the end-2009 figure of 151,000. In spite of this, the increase in demand for goods and
by demand effects                     services was such that employment in other sectors rose by 15% within the space of two
                                      years. These figures show that a robust Swiss economy is reliant not only on a strong bank-
                                      ing sector as a source of demand but also on a high-performance workplace as a source of
                                      supply 1.

                                          Bi-directional interconnectivity, see BAKBASEL (2011).

16    The importance of the Swiss banking sector – SBA – August 2012
Cuts in banking jobs        Generally speaking, this interconnectivity means that, per 100 bank employees, indirect ef-
affect other sectors        fects create 115 extra jobs in other sectors. The major importance of the banking sector for
disproportionately          the rest of the economy will also apply if jobs are cut in the near term: for every 100 jobs
                            that are cut in the banking sector, 115 are lost in other sectors. The prevailing framework
                            conditions in the banking sector, such as cost disadvantages due to certain taxes or to com-
                            pliance with more stringent regulatory requirements for banks in Switzerland, will trigger
                            consequences in other economic sectors that even outweigh those in the banking sector.

Spillover effects further   The figures in tables 3-2 and 3-3 underestimate the value added and employment effects in
enhance impact of banking   other economic sectors that can ultimately be attributed to the banking sector, since they
sector                      do not include the supply-side effects on other economic sectors. They also do not take
                            account of positive externalities. The banking sector contributes to Switzerland as a centre
                            of knowledge through its high level of education and training; cooperative over research
                            enhances the international appeal of Swiss universities; network effects and clusters en-
                            rich other industries. For example the tourism industry and watch and jewellery businesses
                            benefit from wealthy private banking clients who combine their visit to the bank with an
                            extended stay or luxury purchases.

                                                                  The importance of the Swiss banking sector – SBA – August 2012   17
4 Conclusion

Banking remains a key                 In spite of the setbacks suffered during the crisis years, banking remains one of the key sec-
sector of the economy                 tors of the Swiss economy. It continues to make a significant contribution to gross value
                                      added and is inextricably linked to the other economic sectors. The other sectors benefit
                                      from the banks in several ways. On the one hand, as a provider, they generate inputs for
                                      the banking sector or offer consumer goods and services to bank employees. On the other
                                      hand, business benefits from the banking sector’s role as a network sector, which means
                                      access to credit is easy and interest rates are lower than in other countries. Multinational
                                      companies have numerous specific services at their disposal.

„Made in Switzerland“ is              In return, banks in Switzerland benefit from the good reputation of Swiss industry. Were it
a stamp of quality                    not for the „Made in Switzerland“ stamp of quality shaped by the engineering and watch
                                      industry, the banking sector may not have grown to the size it is today. Both business and
                                      the banking sector are reliant on good framework conditions. However, regulatory tighten-
                                      ing in the wake of the financial crisis added to the pressure already placed on the Swiss
                                      banking sector by falling margins. To be competitive, a financial centre requires sensible and
                                      appropriate regulation, which can only be developed through banks and the authorities
                                      working together in dialogue. In light of the interconnectivity, it is important they compete
                                      as a united front against international locations, but given the new political realities, this is
                                      also an imperative.

18    The importance of the Swiss banking sector – SBA – August 2012
 • Swiss Bankers Association
  Aeschenplatz 7
  PO Box 4182
  CH-4002 Basel
T +41 61 295 93 93
F +41 61 272 53 82 Swiss banking sector – SBA – August 2012
  20     The importance of the

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