Swiss banks want to get back business they once lost. To do so they spare no effort, yet look out for themselves.
The title of the letter sounds completely harmless, but the letter shows it all.
“Statement on the amendment of the Collective Investment Schemes Ordinance” is the headline of the document sent to the Federal Department of Finance (FDF) by the Swiss banks through their mouthpiece, the Swiss Bankers Association (SBA).
Strengthening the financial center
But the paper’s inconspicuous title should not obscure its explosive nature, because the letter is actually a ‘declaration of war.’
The draft concerns an important topic for the Swiss fund and financial center, it begins right from the outset.
Business that has migrated to Luxembourg is to be brought back to Switzerland with the so-called L-QIF bill.
“The bill is intended to further strengthen the competitiveness of the fund center and its innovative strength,” the SBA stipulated.
The Swiss bankers around UBS, Credit Suisse, ZKB, Raiffeisen & Co. demanded that the parliament should therefore – contrary to the guidelines of the Federal Council – at least structure the ordinance in such a way that the legal situation is as good and flexible as that in Luxembourg.
However, the draft does not fulfill this intention at all, they warn, and demand adjustments.
First of all, the bill even contains numerous provisions that are not limited to the L-QIF bill, but surprisingly are supposed to apply to all funds and custodian banks in Switzerland. This does not please the SBA at all.
The competitiveness of Swiss banks in Europe would be ‘considerably impaired,’ the Swiss credit institutions warn, if the whole thing were to be implemented in this way.
Actually, the Swiss legislation should have just reached EU law. However, the bill overshot its mark, which astonishes the Bankers Association.
Paying attention to Switzerland only
It had to be ensured, for example, that the safekeeping of fund assets abroad did not fall within the scope of the Collective Investment Schemes Ordinance. It must therefore be ensured that the new ordinance does not go beyond this.
New provisions even massively complicate distribution because the provisions require detailed knowledge of the actual group of investors. This interferes significantly with established practice, the bank representatives warn.
This would introduce new obligations, not only for the custodian bank but also for the fund management company, which would represent considerable additional work and a departure from established processes, they prophesized.
The red-marked adjustments that muula.ch found are still exciting, because they show how Swiss banks think. On the one hand, they want to avoid incurring additional liabilities. So the sentence requiring that they must have information to ‘adequately assess the liquidity of the funds’ should be dropped.
On the other hand, they also don’t want to be responsible for the content of the funds. “They shall ensure that the best possible result in financial, timing and quality terms is achieved in the execution of securities trading and other transactions,” Switzerland is better to delete.
Bankers also want to avoid regular checks on the selection of counterparties, although this is actually in the spirit of the quality of the financial center.
Luxembourg can learn
And if there is damage/loss to investors, the management of the fund should of course compensate. The sentence should be reinserted so that it is clear who pays in the event of such a case.
Ultimately, Luxembourg just needs to study the Swiss banks’ declaration of war carefully to see what is most concerning to the Swiss money houses. Then Luxembourg lawmakers can just act in the opposite direction and not have to fear stiff competition from Switzerland.