Bank categories
Banks in Switzerland
In addition to the diverse industrial activities and services on which the reputation of Switzerland is based, due to the presence of a large number of Swiss or foreign-owned banking operators, this country is also a renowned banking center.
Definitions
Banks are defined as companies that fulfil all the following requirements:
- active mainly in the financial sphere;
- procure their funds either by accepting deposits from the public or by refinancing at various banks that do not hold any major participation in the bank in question;
- use their funds to finance an indefinite number of persons or companies with whom/which they do not form an economic unit.
Creation of bank categories
To ensure that it can meet its publication duties without infringing on its duty of confidentiality, the Swiss National Bank groups the data it collects into bank categories. The categories are defined by the Swiss National Bank and are based on a number of different characteristics such as business focus, geographic scope of activities and legal status, although no explicit criteria are specified.
The characteristic features of the different bank categories are set out below. The description applies to a typical bank within a specific category, although it will not necessarily apply fully to all members of the category.
Cantonal banks (category 1.00)
Business focus: Most cantonal banks operate in all fields of business, although they are particularly strong in the savings and mortgage business. In a few cases, asset management for domestic customers also plays an important role.
Geographic scope of activities: Cantonal bank operations are largely focused on their own canton, although some of them have branches outside their canton or offices even outside the country.
Legal status: Most cantonal banks are institutions under public law, with their own legal status. There are also some semi-private and private joint-stock companies.
Trade association: The Association of Swiss Cantonal Banks was founded in 1907. It acts for the category as a whole and promotes cooperation between its members.
Special features: Since the revision of the Banking Act on 1 October 1999, a cantonal guarantee has no longer been regarded as the constitutive feature of a cantonal bank. The Canton of Berne plans to phase out its cantonal guarantee in a gradual process terminating in 2012. However, it is the only canton planning to take this step. Even before the revision of the Banking Act there was no cantonal guarantee for the Banque Cantonale Vaudoise while the cantonal guarantee for the Banque Cantonale de Genève was limited. All other cantonal banks will retain an unlimited cantonal guarantee.
Big banks (category 2.00)
Business focus: In principle, the big banks cover all types of business. These include, in particular, investment banking (capital market transactions, securities trading, money market transactions, financial engineering, securities lending, consulting services for company mergers and acquisitions as well as the implementation of such operations).
Geographic scope of activities: The big banks operate globally, with a net-work of branches and subsidiaries around the world.
Legal status: Private joint-stock companies.
Trade association: -
Special features: In 2005, Credit Suisse and Credit Suisse First Boston merged. This left only two banks in the big bank category (UBS and Credit Suisse). Statistics will continue to be published for this category because of the economic importance of the big banks.
Regional banks and savings banks (category 3.00)
Business focus: Most banks in this category focus on traditional interest rate business with mortgages and corporate loans, on the one hand, and customer savings and deposits, on the other.
Geographic scope of activities: Regional.
Legal status: Mostly private joint-stock companies, although there are also cooperatives or other legal forms.
Trade association: The association of Swiss regional banks (RBA) was established in 1971, and most of the banks in this category then joined the association. The RBA Holding was created in 1994. Its membership is decentralised and autonomous. RBA Holding services are available to assist members in back-office operations.
In 2004, Clientis Group was established as a collaborative venture by about 30 medium-sized and smaller RBA banks together with Clientis AG. The Clientis Group is organised legally in the form of a simple partnership, with Clientis AG carrying out the executive functions. It provides members with access to money and capital markets, as well as centralised support and transaction services.
Special features: -
Raiffeisen banks (category 4.00)
Business focus: The Raiffeisen banks focus mostly on traditional interest rate business with mortgages and corporate loans, on the one hand, and customer savings and deposits, on the other.
Geographic scope of activities: Although most of the business done by individual offices is regional, the Swiss Union of Raiffeisen Banks operates throughout the country.
Legal status: Cooperative.
Trade association: The Swiss Union of Raiffeisen Banks guarantees all the liabilities of its member banks, while the member banks bear liability for the Union. The Union also takes on strategic and operational tasks. Money transactions between individual Raiffeisen banks pass through the Union's central bank which also guarantees group liquidity requirements and conducts its own banking transactions.
Special features: Since 2000, data provided by the central bank of the Swiss Union of Raiffeisen Banks has been reported together with data from the individual Raiffeisen banks, rather than under the category of institutions with a special field of business.
Other banks (category 5.00)
The category of other banks includes the following sub-categories: commercial banks (5.11), commercial and investment banks (5.12), other banking institutions (5.14) and foreign-controlled banks (5.20).
Commercial banks (category 5.11)
Business focus: Banks in this category operate in the fields of corporate and retail banking and asset management, as well as in investment banking.
Geographic scope of activities: Mainly domestic.
Legal status: Private joint-stock companies.
Trade association: Since 1981, the Association of Swiss Commercial and Investment Banks has represented the interests of commercial banks and commercial and investment banks.
Special features: -
Commercial and Investment banks (category 5.12)
Business focus: Commercial and Investment banks focus on the field of asset management. They serve clients both inside and outside Switzerland.
Geographic scope of activities: International.
Legal status: Private joint-stock companies.
Trade association: Since 1981, the Association of Swiss Commercial and Investment Banks has represented the interests of commercial banks and commercial and investment banks.
Special features: -
For more informations about commercial and investment banks...
Other banking institutions (category 5.14)
Business focus: -
Geographic scope of activities: -
Legal status: -
Trade association: -
Special features: This category covers all banks that cannot be included under another heading. Consequently, there are no significant features in common.
Foreign-controlled banks (category 5.20)
Business focus: Many foreign-controlled banks operate in all fields of business, but some of them focus on asset management or investment banking. In the case of asset management, the clientele is usually foreign.
Geographic scope of activities: International.
Legal status: Almost exclusively private joint-stock companies.
Trade association: Since 1972, all foreign banks have belonged to the Association of Foreign Banks in Switzerland. Foreign banks include both the foreign-controlled banks operating under Swiss law (category 5.20) and the branches of foreign banks operating in Switzerland (category 7.00).
Special features: The foreign-controlled banks are organised in accordance with Swiss law. Generally, permits for the establishment of such banks are only granted subject to a number of additional requirements.
A bank is deemed to be foreign-controlled if foreigners with a qualified participation in the bank directly or indirectly hold more than half of its voting shares, or if they exercise a controlling interest in any other manner. Under the Banking Act, foreigners may be either individuals or legal entities.
Finance companies (category 6.00)
Business focus: -
Geographic scope of activities: -
Legal status: -
Trade association: -
Special features: Bank-like finance companies were inc1uded in SNB data collection from 1971 to 1994. After February 1995, however, there were no more bank-like finance companies in Switzerland: under the revised Banking Act such companies were required either to apply for a banking licence or transform their organisation into a finance company (which is not subject to the provisions of the Banking Act). Thus, information on bank-like finance companies was last collected for this publication at the end of 1994.
Branches of foreign banks (category 7.00)
Business focus: Most branches of foreign banks operate in the field of investment banking. A few banks also focus on asset management for foreign clients.
Geographic scope of activities: International, focused particularly on the country of origin.
Legal status: Unlike foreign-controlled banks, the branches of foreign banks are not legal entities in their own right. In terms of their business operations, as in legal respects, they are subordinate to their parent company.
Trade association: Since 1972, all foreign banks have belonged to the Association of Foreign Banks in Switzerland. Foreign banks include both the foreign-controlled banks operating under Swiss law (category 5.20) and the branches of foreign banks operating in Switzerland (category 7.00).
Special features: A licence is required for any foreign bank wishing to establish a registered office, branch office or agency.
Additional information may be found in the Ordinance on Foreign Banks in Switzerland (Foreign Bank Ordinance).
Private bankers (category 8.00)
Business focus: Most private bankers work in the field of asset management. Their clientele is both domestic and foreign.
Geographic scope of activities: International and domestic.
Legal status: Sale proprietorships, limited and general partnerships.
Trade association: The Swiss Private Bankers Association, founded in 1934, represents private bankers.
Special features: Private bankers who do not actively seek deposits may waive the statutory transfers to reserve funds, since the partners are jointly and severally liable. In addition, they are not required to publish either annual or interim financial statements.
Swiss National Bank
As an independent central bank, the Swiss National Bank (SNB) pursues a monetary policy that serves the interests of the country as a whole. It also regulates money circulation, facilitates payments transactions and advises the federal government on currency matters.
When the Federal Constitution was revised in 1891, the Confederation was granted the exclusive right to issue banknotes. In 1905 the SNB was established, commencing operations two years later, and the right to issue banknotes was transferred to the SNB.
The SNB is a special-statute joint-stock company whose purpose, activity and organisation are governed by the National Bank Act. The cantons, the cantonal banks and other public law corporations and institutions hold more than half of the SNB share capital. The Swiss Confederation does not hold any share capital.
The revised National Bank Act has been in force since May 2004. The revised version includes a detailed description of the SNB's constitutional mandate. Pursuant to art. 5 of the Federal Act on the Swiss National Bank (NBA), the SNB pursues a monetary policy serving the interests of the country as a whole. It is required to ensure price stability and take due account of economic developments. In this respect it has the following tasks: to provide the Swiss franc money market with liquidity, to ensure the supply and distribution of cash, to facilitate and secure the operation of cashless payment systems, to manage the currency reserves and contribute to the stability of the financial system. It also participates in international cooperative bodies in the monetary field and provides banking services to the Swiss Confederation.
The SNB's statistical activities are now covered by the revised National Bank Act (art. 14 et seq. NBA, in particular). Under these provisions, the SNB may collect all the statistical data it requires for fulfilling its mandate. The SNB has specified the requisite surveys in the Implementing Ordinance relating to the Federal Act on the Swiss National Bank (NBO).
The above information is taken selectively from the publication entitled "Banks in Switzerland", published annually by the Swiss National Bank (www.snb.ch).
However, the information provided on this page should not be considered exhaustive, as it refers to the fields of activities, the geographical scope and the legal forms of the banks constituting the Swiss financial center.
Last update: april 2007