financial system of switzerland

8/12/2019 Financial System of Switzerland

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WELCOME TO ourPRESENTATION

NAME ROLLNupur Ghosh 09

Marzan Ara Hira 10

Md. Mizanur Rahman 31

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FINANCIAL INSTITUTIONSANALYSIS OF SWITZERLAND

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Introduction

Switzerland is in the

central Europe

Capital is in Bern

26 Cantons

Swiss Federal State in

1848

Diversified culture

Switzerland

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Capital Market

Shares

Funds

EquityRights

Bonds

Longtermfunds

Debt

Securities

Swiss capital market has broad

deal sheet

It spans rights, offering bond

offerings, IPOs.

Swiss capital market regulation is

FINMA

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Capital market

If an investor carries out a long

term transaction, one will be in

capital market

Capital market gets together

supply and demand

capital market is a long term

financing in Swiss nationaleconomy

Banks and stock exchange are

characterized by uniform

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Money Market

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To cover short term peaks in

payment transaction, commercial bank

avail themselves in money market


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Money Market

Companies obtain financing in the money and

capital market. Capital producers and borrowers meet

Short term money are traded in Swiss money market

The Swiss National Bank(SNB) and commercialbanks avail in money market


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Swiss money market is also known

as interbank market that borrows

money from central bank

This loan are known as discount

loan, lombard loan, swap loan

Swiss money market depends on

interpersonal relationship between

lenders and borrowers

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Money Market Components

CommercialCompanies

InsuranceCompanies

Pensionfund

PublicInstitution

PrivateIndividuals

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Money Market

Short termDetermined

by SNB

This must adjustaccording to economiccondition

Medium and short termloans are available

share, bond, investmentfunds, mortgage loan areavailable.

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Swiss Bond Market

SIX Swiss exchange in Zurich is

principal stock exchange

SIX Swiss Exchange also trades

securities

Like Swiss government bonds and

derivatives (stock options)

Swiss market index consists 20

significant equity securities

It is based on free float market

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SWISS Stock Market

In 2004, SIX Swiss exchange rejectedmerger with German partners

The exchange has blue chip index asits principal

SMI comprises maximum 20 of thelargest and mid-cap SPI stock

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Foreign Exchange Trading

Equal TradingRights

TransactingPricing

Environment

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FOREX Trading Services

Attractive spreads

Security of the Fund

ECN (Electronic Communication Network) Liquidity

Wide range of trading orders

Instant Execution

Equal price and liquidity for all clients

Advanced trading technology

Sophisticated Analysis and news

Technological Stability

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National Financial Regulatory

Agencies of Switzerland

Swiss Financial Market Supervisory Authority (FINMA) is the

government regulatory body responsible for financial regulation.

It supervises banks, insurance companies, stock exchanges andsecurities dealers as well as other financial intermediaries.

FINMA is an independent institution with its own legal personality.

It is institutionally, functionally and financially independent from

the central Federal Administration.

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FINMA was founded on 22

June of 2007 with the passing

of the Federal Act on the Swiss

Financial Market SupervisoryAuthority.

FINMA has a special

regulatory dedicated to each ofthese two institutions.

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Overview of FINMA

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Functions and Responsibilities

of FINMA

FINMA

As a state regulatory body FINMA is endowed with supreme authorityover banks, insurance companies, stock exchanges, securities dealers andcollective investment scheme.

FINMA

It is responsible for combating money laundering

Conducts financial restructuring and bankruptcy proceedings.

FINMA

FINMA grants operating licences for companies and organizations subjectto its supervision

It monitors the supervised institutions with respect to their compliancewith the requisite laws, ordinances, directives and regulations.

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Organizational Structure of

FINMA

Organizational Structure of FINMA

FINMA is made up of a board of directors, anexecutive board and an extended executiveboard.

The Executive Board is FINMAs operational

management body and is responsible forensuring that banks insurance companies stockexchanges, securities dealers and otherfinancial intermediaries are supervised inaccordance with the law and respectivestrategy.

The Board of Directors is a strategicmanagement body and has seven to nineindependent expert members appointed viaparliament.

It decides on matters of substantial importanceissues, ordinances, and circulars and isresponsible for FINMAsbudget.

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Authorized Institutions of

FINMA FINMA maintains the following lists of all authorized institutions

and investment funds.

Authorized banks and securities dealers-

Name

Acrevels Bank AG

AP ANLAGE AndPRIVATBANK AG

Banca Arner Sa

Arvest PrivatbankAg

And Others

City

St.Gallen

Zurich

Lugano

Plattkon

Securities Dealer Type

Swiss SecuritiesDealer

Swiss Securities

Dealer Foreign-

controlledsecurities dealer

Swiss securitiesdealer


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Authorized Raiffleisen banks-

Name

Banca Raiffleisen Biasca

Banca Raiffleisen del BassoMendrisiotto

Banca Raiffleison delMoessano

City

Bellinzona

Chiasso/TI

Lostallo/GR

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Authorized representative offices of foreign

banks and securities dealers:

Banco calsxa Geral SA

Bank Happollam B.M.

BGC Brokers L.P.

NameGeneve

Zurich

Nyon

City

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Banks and securities dealers discontinuing their business

activities-

Name

Deka Finanz AG

NBF International SA

Sydbank AG in Liquidation

City

Zurich

Geneve

St. Gallen

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Investing in Switzerland

Switzerland is an attractive

destination for foreign investors

because of its economic and

political stability, its transparent

and foreign legal system, itsreliable and extensive

infrastructures and its efficient

capital markets. Moreover

many tax incentives are offered

by cantons(states), in order toattract companies to establish

operations and invest in their

jurisdictions.

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FDI in Switzerland

Foreign Direct Investment 2010 2011 2012 2013

FDI Inward Flow (million USD) 32,550 11,817 3,613 36000

FDI Stock (million USD) 617,703 644,912 665,596

Performance Index*, Ranking on

181 Economies18 31 -


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Potential Index**, Ranking on 177 Economies - 30 -

Number of Greenfield Investments*** 533 532 391

FDI Inwards (in % of GFCF****) 29.7 8.8 2.9

FDI Stock (in % of GDP) 112.2 97.6 100.7


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Inward Foreign Investment

The stock corporation [

societe anonyme ( SA)/Aktiengessellschaft(AG)is the most widespreadform of businessorganization .

The limited liability company[societe a responsabilitelimitee (SARL)/ Gesellschaftmit beschrankter Haftung(GmbH0] has recently beenused more frequently becauseof its less stringent regulatorystructure.

Form ofcompany

preferred byforeign

investors

1. McDonalds Corporation,

2. IBM

3. Altria Group, inc. (PhillipMorris)

4. Johnson & Johnson Intl.,

5. Proctor& Gamble

6. Synthes,

7. Hewlett- packard inc.

8. Compaq,

9. Texas Pacific,

10. General Electric

11. Caterpilar.

Main foreigncompanies


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Procedures Relative To Foreign

Investment

Freedom of Establishment Guaranteed

Acquisition of Holdings Possible

Obligation to Declare No such declarations are not required, in

order to prevent the misuse of its very

liberal market framework, the SwissGovernment has introduced Due Diligence

Guidelines in the banking industry under

which banks must identify the beneficial

owner of the invested funds.

Competent Organization for theDeclaration

Federal Department of FinanceSwiss Federal Banking

Commission(SFBC)

Requests for Specific Authorizations Companies working in sectors like

banking and insurance need to seek

government permission to invest directly

in the country.


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Investment Aid

Forms of Aid Investment incentives are offered at thefederal and state levels, which could include:

Tax holidays or reduced tax rates up to ten

years. Subsidies on interest of bank loans .

Offering loan guarantees.

Privileged Domains Large scale investments in manufacturing andservice sectors with potential for job creation

are preferred.

Privileged Geographical Zones There are warehouses in the country where

goods can be imported duty-free as long as

these goods are subsequently re-exported.

Free Zones No free zones exist in the country.

Organizations Which Finance Swiss Agency for Development and

Corporation

Swiss Funds Association

Swiss Bankers Association


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Outward Foreign Investment

Although the global financial and economic crisis pushed the country into a

recession and triggered a sharp decrease of OFDI flows, the Swiss OFDI

stock continued to grow in 2008 and 2009. A well balanced economic

structure based on innovation and knowledge and coherent government

policies set the path for a sustainable growth of FDI.

Reasons behind Switzerlands Outward Foreign direct Investment

Small size of the country,

Natural shortages,

Geographic location.


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Switzerland: outward FDI flows, 2001-2009

(US$ billion)

Switzerland 2001 2002 2003 2004 2005 2006 2007 2008 2009

Economy 17 8 15 27 54 70 70 50 14


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Eurocurrency Market

The Eurocurrency market owes its existence to differences in

national financial regulation combined with declining barriers

to international capital movements.

The Eurocurrency market and its offspring- the Eurobond,

Euro commercial paper and Euro equity markets comprise

some of the most financial innovations of the last 40 years.


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The Eurocurrency and Eurobond markets, virtually non-existent until the late 1950s, have grown to become major

centers of activity and in many instances the preferredmarket for raising or investing funds.

The Eurocurrency market is the market for deposits

placed under a regulatory regime different than theregulations applied to deposits used to execute domestictransactions.

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Eurocurrency is used for lending and borrowing. The Eurocurrency

market often provides a cheap and convenient form of liquidity for

the financing of international trade and investment.

The main borrowers and lenders are the commercial banks, large

companies and the central banks.

Although Eurocurrency banking originated in Europe, today thereare market centers scattered around the globe. These centers are

linked by high speed communication lines so that there are very few

hours during which euro banking business is not being transacted.

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Types of Financial Market

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Major Types of Financial

Institutes

Banks

Insurance

Broker-Dealer

Asset Manger

Fund Providers

Specialist Financial Service Providers

Stock Exchanges


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Number of Financial Institutes

Financial Institutes Numbers

Banks 325

Insurance 224

Broker-Dealer 343

Asset Manager 124

Audit Companies 12

Authorized Financial Intermediaries 292

Rating Agency 16

Stock Exchanges 186


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Numbers of Financial

Institutes(Banks)

Banks Category Number Balance Sheet Total

Cantonal Banks 24 403,548

Large Banks 2 1,444,799

Regional Banks and Savings Banks 70 92,276

Raiffeisen Banks 1 139,520

Other- Commercial Banks 0 0

Other-Stock Exchange Banks 49 138,424

Other-Consumer Finance and other banking Intuitions 9 58,745

Other-Foreign Controlled Banks 123 327,811

Branches of Foreign Banks 33 23,891

Private bankers 14 39,211

Total 325 2,668,225


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The Five Major Banks

The Top 5 Banks of Switzerland are:

1. UBS

2. Credit Suisse

3. Cantonal Bank

4. Pictet and Cie

5. Bank Julius Baer


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UBS (United Bank of

Switzerland)

The largest Swiss bank and has a major globalpresence.

In 2010, it was the tenth largest bank in the world, with$1.8 trillion dollars of assets under management.

It had offices in 50 countries and over 64,000

employees.

Known for its private wealth management but also hassignificant investment banking operations.


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Overview of UBS

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Credit Suisse

Credit Suisse is another major bank in Switzerland, with $1.1trillion of assets under management in 2010.

The company had over 50,000 employees worldwide in 2011.

Credit Suisse is viewed as more of an investment bank,

providing advice to corporations on mergers and acquisitionsand debt and equity offerings.

The company also has a significant sales and trading operationto power its revenue and profit.


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Overview of Credit Swisse

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Cantonal Bank

The Cantonal Bank has 24 subdivisions for each canton, or state, inthe country.

Each bank is primarily owned by the canton where it is located.

In total, the banks had about $400 billion in assets undermanagement in 2010.

These banks are primarily retail-oriented for the common Swiss

citizen.

They typically do not engage in risky lending and do not extendtheir product lines or expand internationally.


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Pictet and Cie


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Pictet and Cie

Pictet is Switzerland's largest bank catering to high-end clientle andfocused completely on asset management.

The company does not engage in any investment, retail or

commercial banking.

the firm focuses on placing its clients assets in hedge funds, privateequity and other investment vehicles.

Overall the company managed about $380 billion in 2010.

Unlike most banks, which are corporations, it is a partnership ownedby eight individuals.


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Overview of Pictet and Cie

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Bank Julius Baer is another private bank focused on

wealthy clientle.

The firm focuses on Europe and Asia, with offices in 20

countries and over 3,500 employees in 2011.

Founded in 1890, the company had about $183 billion

assets under management by the end of 2010.


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Overview of Bank Julias Baer

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The Five Non Bank Major FIs

1. Six Swiss Exchange (Stock Exchange)

2. Swiss Insurance Companies (Insurance)

3. 3V Asset Management AG (Asset Management)

4. A. Strasser & Co. (Authorized financial intermediaries)

5. Balmar-Etienne AG (Audit Companies)


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Major Types of Products

Major types of products offered by the financial institutes:

1. Shares

2. Bonds

3. ETFs & Bonds4. Exchange Traded Products

5. Listed Derivatives


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Shares

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Bonds

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ETFs & Bonds

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Exchange Traded Products

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Listed Derivatives

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financial system of switzerland

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