Will Brexit be good or bad for Switzerland?
Switzerland's relationship with the EU has been strained at times, but could the terms the UK arranges as it prepares to leave he union provide a boost for Swiss banks? Brian Caplen thinks it might.
The former head of Switzerland's central bank, Philipp Hildebrand, recently put a damper on the idea that the Swiss-EU structure would be a great Brexit model for the UK.
He told a Financial Times conference: “We have not been able in any way to regain any sovereignty on immigration, and we have no financial services agreement, despite the fact that we’ve negotiated for 10 years. Don’t believe that you’ll get anything else.”
In fact, Swiss-EU relations are on something of a collision course since the Swiss people voted in a 2014 referendum for restraints on EU immigration.
Switzerland does not have access to the single market, which is particularly troublesome for its wealth management business, and so gets by on a combination of passporting from an EU subsidiary, equivalence and old-fashioned cross-border business on a bilateral basis.
But is there another angle to all this? Can Switzerland use the Brexit opportunity to improve its own position? One suggestion is an alliance between the UK, Switzerland, Hong Kong and Singapore to negotiate a common financial services deal.
In a blog just after the UK vote to leave the EU, Stefan Hoffmann, head of European affairs for the Swiss Bankers Association, said: “We as Swiss citizens should above all recognise this as an opportunity both for us and for the whole, and not mourn the past: what was once at an impasse will now begin to move towards resolution, what was once blocked will now disentangle itself. The status quo of the Switzerland-EU relationship is no longer an option.”
These optimistic sentiments are the polar opposite of how most people in UK finance feel about things. They feel the best they can get will be worse than the status quo.
But clearly the Swiss angle does add some heft and the greater negotiating weight one has, the more likely that there will be a better outcome.
At Sibos 2016 in Geneva, The Banker will be hosting a panel to look at possible scenarios for both the UK and Switzerland post-Brexit. Sibos delegates are invited to join us for the discussion by registering here.
Brian Caplen is the editor of The Banker.
