April 2016 www.sif.admin.ch Switzerland as a location for financial services Figures
1 Economic importance of the Swiss financial centre Over the past ten years, the contribution of insurance companies to added value has increased by more than a third, whereas that of banks has fallen due to the global financial crisis. Table 1 Nominal added value, in CHF mn 2005 2010 2015 Financial services 38 334 36 043 33 448 Insurance services 19 766 24 859 27 477 Financial sector total 58 100 60 902 60 924 in % of GDP 11.4 10.0 9.5 Gross domestic product (GDP) Switzerland 507 463 606 146 639 731 Source: Federal Statistical Office (FSO) / State Secretariat for Economic Affairs (SECO), Annual aggregates of GDP, production approach, annual data. Share of the financial centre in GDP (2015)* Accounting for 9.5%, 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 % 26.3 11.9 9.5 3.9 7.3 7.0 Germany Luxembourg Switzerland Singapore UK USA * The values for Luxembourg and the United States refer to 2014. 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).
Over the last decade, the growth in employment was driven primarily by an increase in non-core financial centre jobs. Table 2 Jobs, in full-time equivalents 2005 2010 2015 Financial services 109 700 125 000 116 300 Insurance services 44 500 42 500 44 000 Activities auxiliary to financial services and insurance activities 34 800 49 000 55 000 Financial sector total 189 000 216 400 215 300 in % of overall employment 5.7 6.0 5.6 Overall employment (second and third sector) 3 316 900 3 617 600 3 839 600 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 Taxes, 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 in % of overall tax revenue 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 2012 2013 2014 Net exports financial services 17.2 17.3 16.7 Net exports insurance services 4.6 4.9 5.2 Financial sector total 21.8 22.2 21.8 in % of Switzerland s current account surplus 33.9 31.4 38.5 Current account surplus 64.3 70.8 56.7 Source: SNB data portal (https://data.snb.ch), annual data. Swiss foreign direct investment abroad is relatively high by international standards. The financial sector makes a significant contribution to this. Table 5 Direct investments abroad, in CHF bn 2012 2013 2014 Capital stock of banks abroad 79 91 84 Capital stock of insurance companies abroad 138 128 87 Total 217 219 171 As a percentage of total Swiss capital stock abroad 19.8 20.6 16.2 Total capital stock abroad 1 093 1 064 1 056 Source: SNB data portal (https://data.snb.ch), year-end values.
Bank claims against banks (2005 2015) 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. 1200 in CHF bn 1000 800 600 400 200 0 2005 2007 2009 2011 2013 2015 Cross-border interbank transactions Domestic interbank transactions Data: SNB data portal (https://data.snb.ch), year-end values.
3 Banks There has been consolidation in Switzerland s banking sector over the past ten years. This structural change is evident in the decline of 25% each in the number of regional banks and savings banks, and foreigncontrolled banks. The number of private bankers has even been halved. Table 6 Number of banks 2004 2009 2014 Cantonal banks 24 24 24 Big banks 3 2 2 Regional banks and saving banks 83 70 63 Raiffeisen banks 1 1 1 Stock exchange banks 53 49 47 Foreign-controlled banks 123 123 91 Branches of foreign banks 25 33 27 Private bankers 14 14 7 Other banking institutions 12 9 13 Total 338 325 275 Source: SNB, Banks in Switzerland, table 3.
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 banks credit lines (credit volumes), in CHF bn 2013 2014 2015 Domestic lending 1 035 1 066 1 078 Foreign lending 144 157 169 Total 1 179 1 223 1 247 Of which domestic mortgage claims 865 897 923 Source: SNB data portal (https://data.snb.ch), year-end values. The high volume of bank securities holdings reflects the prominent role of asset and wealth management in Switzerland s financial centre. Table 8 Securities holdings in client bank accounts, in CHF bn 2013 2014 2015 Swiss custody account holders 2 329 2 564 2 622 Of which private customers 509 539 528 Of which commercial customers 197 191 193 Of which institutional investors 1 624 1 835 1 902 Foreign custody account holders 2 768 3 001 2 896 Of which private customers 562 557 493 Of which commercial customers 100 82 86 Of which institutional investors 2 107 2 362 2 316 Total 5 097 5 565 5 518 Source: SNB data portal (https://data.snb.ch), year-end values.
Share of individual banks in the balance sheet total for banks in Switzerland (2014) Although there are 275 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. 2% 0% 10% 7% 6% 4% 6% 17% 48% 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 Balance sheet total for all banks: CHF 3 042 billion Data: SNB. Banks in Switzerland 2014, page A2, year-end values.
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 insurance companies 2004 2009 2014 Life insurers 27 25 21 Non-life insurers 116 125 127 Reinsurers 22 26 29 Captives 43 42 33 Overseen health insurance funds (supplementary health insurance) 57 40 14 Total 265 258 224 Source: FINMA, Report on the insurance market in 2014 (direct insurers); 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 2004 2009 2014 Pension funds 2 935 2 351 1 866 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 2004 2009 2014 Land, buildings 37 37 43 Mortgages 28 28 32 Financial interests 53 57 57 Shares and similar investments 40 9 14 Investment funds, own shares and bonds 0 23 41 Fixed-interest securities 206 239 282 Loans, debt register claims 23 19 20 Other investments 54 76 75 Total assets 440 487 565 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 2014 Cash and cash equivalents 44 48 57 Investments with employers 18 10 13 Bonds and medium-term notes 176 226 265 Mortgages 18 16 14 Shares 131 157 228 Real estate and land 70 96 133 Alternative investments 13 33 51 Mixed assets 5 6 12 Miscellaneous 8 6 2 Total assets 484 599 777 Of which collective assets 120 241 424 Source: FSO, Occupational Pension Plan Statistics, year-end values.
5 Swiss stock exchange Trend of the equity market and its main sectors (2006 2016) The low interest rate environment in recent years has made stock market investments more attractive in relative terms. With the exception of banks, many sectors have recorded positive developments in their basket of shares since the onset of the global financial crisis. 300 250 200 150 100 50 0 2006 2008 2010 2012 2014 2016* Swiss Performance Index (SPI) Banks Insurance Food and beverages Health care * Up to end of January 2016 Data: SNB data portal (https://data.snb.ch), (month-end values; own indexing).
Developments on the primary market, i.e. regarding bond issuance, are determined on the one hand by the (re)financing needs of companies and governments; on the other, absolute financing costs (the level of interest rates), as well as their relation to other important capital markets in the various currency areas, also play a role. Table 13 Net CHF capital market borrowing in the form of publicly issued bonds on the SIX Swiss Exchange, in CHF bn 2013 2014 2015 Bonds of Swiss borrowers Issues Redemptions 47 30 49 26 44 26 Bonds of foreign borrowers Issues Redemptions Total net issuing value -6 9-14 Source: SNB data portal (https://data.snb.ch), annual data. 21 45 25 40 18 50 The secondary market, i.e. securities trading, is dominated by Swiss shares. Table 14 Securities turnover on the SIX Swiss Exchange, in CHF bn 2013 2014 2015 Swiss securities: Shares 702 834 1 042 Bonds 90 88 92 Structured products and options (domestic and foreign) 30 27 27 Investment funds (domestic and foreign) 98 98 104 Subtotal 920 1 047 1 265 Foreign securities: Shares 7 11 11 Bonds 77 91 97 Subtotal 85 102 107 Total 1 004 1 148 1 372 Source: SNB data portal (https://data.snb.ch), annual data.
Collective investment schemes authorised in Switzerland: number and domicile (2015) 5 000 4 799 4 500 4 000 3 500 3 000 2 500 Total: 8 560 2 000 1 500 1 385 1 485 1 000 500 0 Luxembourg Ireland 343 France 164 Liechtenstein 384 Other Switzerland Data: FINMA, data at the end of third quarter 2015. 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% 13% Shares Bond issues 2% 12% 40% Money market in CHF Money market in foreign currencies Asset allocations 1% 27% Real estates Miscellaneous Data: SNB data portal (https://data.snb.ch), data at the end of third quarter 2015.
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 Analyses 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. 604.002.1/16Eng April 2016 This report is published on a semi-annual basis in the three official languages of German, French and Italian, as well as in English and Chinese. It can also be downloaded as a PDF file together with additional information on the individual tables at www.sif.admin.ch. 600 03.16 860376268