April Switzerland as a location for financial services Figures

April 2015 www.sif.admin.ch Switzerland as a location for financial services Figures

1 Economic importance of the Swiss financial centre In the past ten years, the contribution of insurance companies to added value has increased by fifty per cent, whereas that of banks has more or less stagnated due to the global financial crisis. Table 1 Added value of the financial sector (at current prices), in CHF mn 2004 2009 2014 Financial services 34 653 38 046 36 875 Insurance services 19 560 24 850 29 202 Total financial intermediaries 54 213 62 896 66 077 Added value as a percentage of GDP 11,1 10,7 10,2 Gross domestic product (GDP) Switzerland 489 369 587 061 648 016 Source: Federal Statistical Office (FSO) / State Secretariat for Economic Affairs (SECO), Annual aggregates of GDP, production approach. Share of the financial centre in GDP (2014)* Accounting for 10,2%, Switzerland's financial centre makes a significant contribution to GDP. By international standards, this is slightly higher than in other major financial centres, but considerably less than in Luxembourg. 30 25 20 15 10 5 0 in % 26,9 10,2 11,8 4,0 8,0 7,2 Germany Luxembourg Switzerland Singapore UK USA * The values for Luxembourg and the United States refer to 2013. Data: German Federal Statistical Office, Statistics Portal Grand Duchy of Luxembourg, FSO/SECO (Switzerland), Singapore Department of Statistics, Office for National Statistics (UK), Bureau of Economic Analysis (USA).

The growth in employment was driven primarily by a significant increase in non-core financial centre jobs. Table 2 Employment in the financial sector, in full-time equivalents 2004 2009 2014 Financial services 113 100 124 000 118 500 Insurance services 52 300 50 000 49 200 Activities auxiliary to financial services and insurance activities 25 700 37 300 42 200 Financial sector total 191 200 211 300 209 900 As a percentage of overall employment 6,2 6,3 5,9 Overall employment (second and third sector) 3 100 900 3 356 200 3 569 900 Source: FSO, Job Statistics, values for the fourth quarter. Switzerland s financial centre makes a significant contribution to the tax revenues of the Swiss economy. Table 3 Financial sector: taxes from individuals and companies, in CHF mn 2008 2010 2012 Taxes from individuals 2 545 2 531 2 636 Taxes from companies 1 145 2 338 3 073 Of which banks 593 1 251 1 543 Of which insurance companies 552 1 087 1 530 Financial sector total 3 690 4 869 5 709 As a percentage of overall tax revenues 5,0 6,5 7,4 Taxes on income and assets at the level of the Confederation, the cantons and the communes 73 855 74 722 77 273 Sources: Swiss National Bank (SNB), FSO, Swiss Financial Market Supervisory Authority (FINMA), Federal Finance Administration (FFA) and Federal Tax Administration (FTA).

2 International integration of the Swiss financial centre The financial sector contributes to Switzerland s current account surplus and thereby to Switzerland s creditor position in relation to foreign countries. Table 4 Nominal foreign trade contribution, in CHF bn 2011 2012 2013 Net financial service exports (banks) 13,4 13,5 17,4 Net financial service exports (insurance companies) 4,3 4,5 5,0 Total 17,6 18,0 22,4 As a percentage of Switzerland s current account surplus 28,6 27,1 32,9 Current account surplus 52,5 66,3 68,0 Source: SNB, Swiss Balance of Payments 2012; Monthly Statistical Bulletin, February 2015, annual data. Swiss foreign direct investment abroad is high by international standards and a significant part comes from banks and insurance companies. Table 5 Direct investments of banks and insurance companies abroad, in CHF bn 2011 2012 2013 Capital stock of banks abroad 77 79 90 Capital stock of insurance companies abroad 132 138 128 Total 209 217 219 As a percentage of total Swiss capital stock abroad 20,0 19,8 20,4 Total capital stock abroad 1 044 1 093 1 073 Source: SNB, Monthly Statistical Bulletin, February 2015, year-end values.

Bank claims against banks (2004 2014) Compared with domestic transactions, cross-border interbank transactions posted very dynamic growth. The leveraging before the latest financial crisis is clearly visible, as is the deleveraging that took place after the outbreak of the crisis. 1000 900 800 700 600 500 400 300 200 100 0 in CHF bn 2004 2006 2008 2010 2012 2014 Cross-border interbank transactions Domestic interbank transactions Data: SNB. Monthly Bulletin of Banking Statistics, tables 1C and 1E, year-end values.

3 Banks There has been consolidation in Switzerland s banking sector over the past ten years. This structural change is evident particularly in the decline of 25% each in the number of regional banks and savings banks, and foreign-controlled banks. Table 6 Number of banks in Switzerland 2003 2008 2013 Cantonal banks 24 24 24 Big banks 3 2 2 Regional banks and saving banks 83 75 64 Raiffeisen banks 1 1 1 Stock exchange banks 55 48 47 Foreign-controlled banks 122 123 93 Branches of foreign banks 26 31 27 Private bankers 15 14 11 Other banking institutions 13 9 14 Total 342 327 283 Source: SNB, Banks in Switzerland.

Since 30 June 2014, the increase in the countercyclical capital buffer has obliged banks to raise the capital for residential mortgages from 1% to 2%. This should help maintain, or further increase, the resilience of the banking sector to a correction in the imbalances on the mortgage and real estate markets. Table 7 Effective utilisation of the bank s credit lines (credit volumes), in CHF bn 2012 2013 2014 Domestic lending 991 1035 1 066 Foreign lending 126 144 157 Total 1 117 1 179 1 223 Of which domestic mortgage claims 830 865 897 Source: SNB, Monthly Bulletin of Banking Statistics, February 2015, year-end values. The high volume of bank securities holdings reflects the prominent role of asset and wealth management in the Swiss financial centre. Table 8 Securities holdings in client bank accounts (domestic and foreign custody account holders), in CHF bn 2012 2013 2014 Swiss custody account holders 2 171 2 329 2 564 Of which private customers 465 509 539 Of which commercial customers 199 197 191 Of which institutional investors 1 507 1 624 1 835 Foreign custody account holders 2 601 2 768 3 001 Of which private customers 562 562 557 Of which commercial customers 94 100 82 Of which institutional investors 1 945 2 107 2 362 Total 4 771 5 097 5 565 Source: SNB, Monthly Statistical Bulletin, February 2015, year-end values.

Share of individual banks in the balance sheet total for banks in Switzerland (2013) Although there are almost 300 banking institutions in the country, Switzerland s banking scene is dominated by the two big banks. This can be seen, for example, in the fact that the two big banks account for around half of the entire balance sheet total. 5% 6% 10% 4% 2% 3% 7% 17% 46% Balance sheet total for all banks: CHF 2 849 billion Cantonal banks Big banks Regional banks and savings banks Raiffeisen banks Stock exchange banks Foreign-controlled banks Branches of foreign banks Private bankers Other banks Data: SNB. Banks in Switzerland 2013, page A2.

4 Insurance companies and pension funds The Swiss Financial Market Supervisory Authority (FINMA) supervises insurance companies in Switzerland. Health insurers are also subject to FINMA supervision for their supplementary health insurance operations. Table 9 Number of overseen insurance companies in Switzerland 2003 2008 2013 Life insurers 26 26 23 Non-life insurers 116 122 124 Reinsurers 21 28 28 Captives 39 42 34 Overseen health insurance funds (supplementary health insurance) 57 44 14 Total 259 262 223 Source: FINMA, Report on the insurance market in 2013; private insurance companies in Switzerland; annual reports. Consolidation can be observed not only in the banking sector, but also among pension funds. Table 10 Number of pension funds in Switzerland 2004 2009 2013 Pension funds 2 935 2 351 1 957 Source: FSO, Occupational Pension Plan Statistics.

Despite the low interest rate environment at present, fixed-interest securities have gained importance as an asset class for insurers over the past ten years. Table 11 Capital investments of Swiss life insurance, non-life insurance and reinsurance companies by investment category, in CHF bn 2003 2008 2013 Land, buildings 37 36 42 Mortgages 30 27 32 Financial interests 54 60 58 Shares and similar investments 36 8 12 Investment funds, own shares and bonds 0 21 33 Fixed-interest securities 197 226 272 Loans, debt register claims 22 19 18 Other investments 58 87 72 Total assets 434 484 539 Source: FINMA, capital investments of all insurance companies, year-end values. Over the past ten years, collective assets have become considerably more important in the capital allocation of pension funds. Table 12 Capital investments of Swiss pension funds by investment category, in CHF bn 2004 2009 2013 Cash and cash equivalents 44 48 58 Investments with employers 18 10 14 Bonds and medium-term notes 176 226 242 Mortgages 18 16 14 Shares 131 157 208 Real estate and land 70 96 123 Alternative investments 13 33 44 Mixed assets 5 6 12 Miscellaneous 8 6 5 Total assets 484 598 720 Of which collective assets 120 241 358 Source: FSO, Occupational Pension Plan Statistics, year-end values.

5 Swiss stock exchange Trend of the equity market and its main sectors (2005 2015) The low interest rate environment in recent years has made investments on the stock exchange relatively more attractive. With the exception of banks, many sectors recorded positive developments in their basket of shares since the onset of the global financial crisis. 350 300 250 200 150 100 50 0 2005 2007 2009 2011 2013 2015* Swiss Performance Index (SPI) Banks Insurance Food and beverages Health care * Until end of January 2015 Data: SNB. Monthly Statistical Bulletin, table F7 (own indexing).

Capital market developments are determined on the one hand by market forces (e.g. inflation, exchange rates and interest rates); on the other, regulation can also have an influence. Table 13 Net borrowing in the form of publicly issued bonds in Swiss francs (issues on the SIX Swiss Exchange), in CHF bn 2012 2013 2014 CHF bonds of Swiss borrowers, issuing value 47 47 49 Redemptions of CHF bonds of Swiss borrowers 26 30 26 CHF bonds of foreign borrowers, issuing value 39 21 25 Redemptions of CHF bonds of foreign borrowers 50 45 40 Total net issuing value 10-6 9 Source: SNB, Monthly Statistical Bulletin, February 2015, annual data. Securities trading is dominated by Swiss shares. Table 14 Securities turnover on the SIX Swiss Exchange (secondary market), in CHF bn 2012 2013 2014 Swiss securities: Shares 587 702 834 Bonds 96 90 88 Structured products and options (domestic and foreign) 32 30 27 Investment funds (domestic and foreign) 83 98 98 Total 798 920 1 047 Foreign securities: Shares 4 7 11 Bonds 91 77 91 Total 95 85 102 Total of foreign and Swiss securities 893 1 004 1 148 Source: SNB, Monthly Statistical Bulletin, February 2015, annual data.

Collective investment schemes authorised in Switzerland: number and domicile (2014) 5 000 4 500 4 426 4 000 3 500 3 000 2 500 Total: 8 014 2 000 1 500 1 000 500 0 Luxembourg 1 184 Ireland 381 France 159 Liechtenstein 410 Other 1 454 Switzerland Data: FINMA, data at end of third quarter. The most widespread collective investment schemes in Switzerland are from Luxembourg (market share over 50%) and those from Switzerland (market share just under 20%). Two thirds of the latter are invested in shares and bonds (see below). 5% 14% Shares Bond issues 2% 12% 40% Money market in CHF Money market in foreign currencies Asset allocations 1% 26% Real estates Miscellaneous Data: SNB. Monthly Statistical Bulletin, February 2015, Table D6 2, data at end of third quarter.

Notes Changes in the figures reported as compared with earlier editions of this publication are generally due to revisions and are not reported individually. Rounding differences are also possible. Address for enquiries: FDF/SIF Financial Market Analysis Section Bundesgasse 3 3003 Bern maerkte@sif.admin.ch Phone: +41 58 462 60 52 Fax: +41 58 463 04 22 Imprint: Published by: State Secretariat for International Financial Matters SIF Orders and Distribution: www.bundespublikationen.admin.ch Art. no. 604.002.1/15Eng April 2015 This publication appears in English, French, German and Italian. It can also be downloaded as a PDF file together with additional information on the individual tables at www.sif.admin.ch. 400 860352797