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Comment by malthaus | Hacker News Reader

Switzerland has been searching for a new USP in finance since the end of banking secrecy, which, together with digital and regulatory change, will marginalize our private banking market position that was so incredibly profitable in the past.

So politicians look to either Fintechs (which are as weak as our startup culture in general) or the hype around the ‚Crypto Valley‘ in Zug which wasn’t homegrown and is primarely driven by a scam-friendly environment provided by government & regulator in combination with path-dependency.

Unfortunately, this will likely end even worse reputationally than being the token (ha!) money hiding place. See the Tezos debacle which is only a glimpse into what will happen when the cryptocurrency house of cards falls apart. Id rather have them be a bit more cautious now as is Swiss tradition and be ready for the more serious ‚rebirth’ afterwards.

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I don't think being a safe place to store money is reputationally harmful.

It is when you get caught with (2017 USD$ adjusted) around $6B in stolen Nazi gold.

You're implying that Switzerland has stolen gold from Germany. Is that true?

I'm pretty sure no one thought that's what I was implying.

If you're trying to be a safe and trustworthy place to store money, your morality shouldn't have any effect on your customers.

If they can store stolen gold for Nazis without running away with it or telling anybody about it, then I'm sure they can safely store money for me as well.

This may be true for your individual reputational valuing of Swiss banks, but isn't for a worldwide one.

And worldwide reputation matter because functional finance, like networking, requires peering at some point.

Major countries have a lot of leverage they can bring when the public is on their side. Viz Swiss secrecy / tax evasion laws being forceably cracked by "terror money" pressure.

> Switzerland has been searching for a new USP in finance since the end of banking secrecy

Money laundering was a stain on our country. Swiss private wealth managers have a unique heritage of experience in managing multinational fortunes. UBS and Credit Suisse are also, while not traditional Swiss private banks, international economic titans. The continued profitability of Swiss banking contradicts your view regarding secrecy and a loss Swiss banking sector.

> UBS and Credit Suisse are also, while not traditional Swiss private banks, international economic titans.

More like giant Golems using mud-made feet for walking. As far as I know UBS was in a very difficult position around 2012-2013 (I wouldn't call it one step away from folding, but it was close to that nonetheless), and it managed only recently to re-put itself in a more stable position (thanks to a new management team). Credit Suisse has also lost most of its allure, they're not in any way swimming with the big boys anymore. So I wouldn't call these two banks "titans" anymore.

Look at the facts, UBS and Credit Suisse are in the top 5 for assets under management banks in the private banking world (source https://en.wikipedia.org/wiki/Private_banking ). Also in top rankings for investment banking ( https://en.wikipedia.org/wiki/Investment_banking ).

UBS pushed more into private banking after the new team was put in place, but I might be wrong on that. Credit Suisse in not in the top 10 in the investment banking chart, and is placed between Barclays and Deutsche Bank, two Golems themselves. To put it into perspective, AIG was the biggest insurer in the world up until the day of its fallout, I wouldn't read too much out of these charts, just a couple of days ago there was an opinion peace in the Financial Times (or maybe the Economist) decrying how Goldman Sachs has lust its shine even though it's placed second in the IB chart. In this industry (one based on trust) momentum is everything.

Nobody is saying UBS or Credit Suisse are well-run companies. The original post argued Swiss banking is rudderless without money laundering. UBS and CS are valid counterpoints, in being diversified international heavyweights. Their profits may be mirages, along with Deutsche Bank and Barclays. But that is a different argument than "they're screwed because they can't launder money anymore."

I was arguing more against the “international titans” thing, I personally think that it is too risky for a relatively small country like Switzerland to stand behind not one but two such big financial institutions and I also think that the two banks’ recent retreat is a realization (by their stakeholders) of this obvious truth. The size thing is why they were closer to folding up compared to a bank like Deutsche, who has been run worse but which the German Government would never let default. On the other hand, the Swiss Government doesn’t have enough reserves to bail out either of them, they probably realized that they don’t want to be the next Iceland hence the banks’ change of course.

Bottom line is that you can only make big money on the international financial markets if your financial “home” market is big enough and if your “home” authorities (the Government) is ready to back you up if anything bad happens by using said home market to pump you up and keep you afloat. The Swiss financial market is just not big enough to keep either CS or UBS afloat in case either of them is about to go down like Lehman.

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