Incoming Swiss banking chief warns against regulatory over-reach
Stay informed with free updates
Simply sign up to the European banks myFT Digest — delivered directly to your inbox.
Switzerland risks undermining its position as a global financial centre by imposing excessive regulation on its banks, the incoming head of the country’s banking lobby has warned, as Bern embarks on its biggest overhaul of the sector since the financial crisis.
Giorgio Pradelli, who heads Zurich-based bank EFG International, takes over as chair of the Swiss Bankers Association (SBA) next month.
Speaking in his capacity as EFG chief executive, Pradelli said Switzerland could not assume its pre-eminence in global banking would endure as competing financial centres simplify their rules.
“We cannot take it for granted that Switzerland will always be prominent if we do not apply the right policies, including the regulatory framework,” he told the FT, adding it “had to be proportionate”.
Pradelli’s intervention is a sign of how concerns that Bern risks overcorrecting for the collapse of Credit Suisse stretch across Switzerland’s financial sector.
Although UBS, which took over its rival in a state-sponsored takeover in 2023, is the bank most directly affected by proposed new rules, the reforms reach across the banking system.
A proposed package finalised this month makes individual senior bankers more directly accountable for failures on their watch, tightens bonus and clawback provisions, gives market regulator Finma greater enforcement powers and strengthens crisis planning and access to central bank liquidity.
The debate over how tough its regulatory regime should be comes at a crucial moment for Switzerland’s financial centre. Hong Kong last year overtook Switzerland as the world’s largest hub for offshore wealth, according to BCG.
US regulators are reducing and simplifying some capital requirements, while the UK has delayed parts of its Basel reforms and sought to limit increases in overall capital requirements for competitiveness.
“What we see in the other financial centres is more a trend of simplification,” Pradelli said. “In the US you might even talk about deregulation. So we need to be [on] one level playing field.”
The EFG chief’s warning comes days before a crucial parliamentary committee meeting on the most contentious part of the reforms affecting UBS.
The upper house’s economic affairs committee is due on Monday to resume deliberations on plans that could force the bank to hold about $20bn more common equity, with lawmakers considering alternatives that could soften the government’s proposal.
Asked whether Switzerland had struck the right balance, Pradelli said: “On stability and proportionality, I believe we’re getting there. On competitiveness, we can improve.”
EFG has emerged as one of the beneficiaries of the upheaval in Swiss wealth management following Credit Suisse’s demise. Shares are up nearly 100 per cent since the other bank’s takeover by UBS.
The private bank attracted SFr5.7bn in net new assets in the first half and has recorded positive inflows for 15 consecutive half-years. It hired 140 relationship managers amid the disruption in 2023 — twice its normal annual hiring target of between 50 and 70 — a period Pradelli described as “pivotal” for the bank.
Geopolitical tensions were accelerating the movement of wealth, he said, with rich clients increasingly diversifying their fortunes not only between investments and banks but across countries and financial centres.
“Clients will no longer put all the eggs in one basket, not even in terms of financial centres,” he said.
