“Swiss banking secrecy is history”, says Julius Baer chairman
In words perhaps no Swiss banker ever expected to hear, the departing chairman of the board of directors at Julius Baer Group said Switzerland’s “banking secrecy, as we knew it, is history”.
In his valedictory speech at the group’s shareholder meeting, Raymond Baer also criticised the press and some politicians – a “self-righteous pack who have tasted blood” – who attacked former Swiss National Bank chairman Philipp Hildebrand, who ultimately resigned in January over allegations about his wife’s currency trading and the SNB’s announced cap on the franc.
Baer labelled the reporting and political baying around this saga “unprecedentedly venomous and aggressive.
“People in public life must prove their innocence and are quickly put under general suspicion,” he said, while adding Hildebrand had displayed “a poor grasp of public perception and mediocre communication skills [and] thus became easy prey”.
In regards banking secrecy, the fourth generation employee from the Baer family to work at the bank that carries its name said: “A large amount of sorting out of the past still lies ahead” for Switzerland and the many other countries that are keen to shine light on its banking system and clients.
America, Germany and the UK are among nations forcing Swiss banks to withhold and remit unpaid tax in their citizens’ undeclared Swiss accounts.
This was far preferable to full exchange of information, said the Julius Baer board member of nine years’ standing.
“The final withholding tax model is inevitable, for the often casual call for the free exchange of information represents no solution for sorting out the past. An exchange of information without taking into account the history would be an illusory solution for sorting out the past and would primarily result in money and jobs leaving Europe.
“Switzerland’s good reputation as a reliable business partner would be damaged if clients did not get a standardised procedure for regularising the past. Switzerland needs responsible solutions to how it should deal with the history of undeclared assets.”
Baer said Swiss politicians must realise their homeland would be unable to “play in Champions League of financial centres” if it kept using secrecy rules from its past.
And a successful transition to new rules was crucial not just for the status of Switzerland as a financial centre, but also for “the future prospects of the Swiss economy on the whole”, he added.
“We must focus all of our efforts on achieving the balancing act between successfully sorting out the past and creating sound operating conditions for the future of our financial centre.”
He urged politicians to put in place global standards. Swiss criteria “should be tolerated, provided that they allow us to put the past definitively behind us. All in all, however, these stricter Swiss criteria cannot be allowed to result in us shifting high value-added jobs abroad. This would be a bitter loss for the entire economy.”
Baer said he would continue to “stand up for the operating conditions of our industry in Switzerland” and “may still serve the Julius Baer group in the future, as honorary chairman”.
He added both Switzerland and his own company had “the best possible prerequisites to be able to successfully master the challenges – stability, openness and trust are the three underlying pillars of prosperity in Switzerland.”
But he said financial institutions should “especially put more effort into building trust once again from which we benefitted in recent years”.
Baer also reflected on his board tenure.
Pointing to the acquisition of hedge fund manager GAM, he said such steps should be “judged according to the reasoning at the time”, when private clients sought such
investments, before they “almost completely turned away from them again when the Bernard Madoff scandal struck”.
He said it had been right in 2009 to completely separate the group’s asset management business from its private banking business, and to buy ING Bank (Switzerland) soon thereafter.
Private client assets more than doubled from CHF 61bn in 2005 to CHF 170bn now, while the group’s shares trade at a price earnings ratio of about 17, not low single digits of 2004, he said.
Among other matters at the AGM, the meeting elected Gilbert Achermann and Andreas Amschwand to the company’s board of directors for one-year, re-elected board members Leonhard Fischer and Claire Giraut, and announced Baer would be succeeded by board member Daniel Sauter.
A CHF 1 per share distribution was also approved, along with a proposed capital reduction.