Black money paradise Swiss banks enjoy 25% profit growth

Zurich/ New Delhi: Banks in Switzerland saw their profits rise about 25 per cent to CHF 9.8 billion in 2017, even as their foreign customer deposits fell amid a global crackdown taking down their famed secrecy walls.

The rebound follows the Swiss banks' profits nearly halving to CHF 7.9 billion earlier in 2016.

The overall customer deposits rose marginally by 1 per cent to about CHF 1.8 trillion, despite the dip in money deposited by their foreign clients, according to data released on Thursday by the Swiss National Bank (SNB).

The domestic customer deposits were up CHF 57.6 billion to CHF 1,193.4 billion, while foreign customer deposits were CHF 40.5 billion lower at CHF 594.7 billion.

A factor contributing to this divergence was big banks' transfer of financing transactions to Switzerland from abroad, accounting for around CHF 17 billion. In 2016, both domestic and foreign customer deposits had increased.

As in 2016, fiduciary funds administered by banks rose, by about 15 per cent to CHF 138.2 billion. While domestic fiduciary funds registered a slight increase of CHF 0.9 billion to CHF 22.7 billion, there was a significant rise in deposits from abroad, which were CHF 16.9 billion higher at CHF 115.6 billion.

A breakdown of fiduciary deposits from abroad showed the developing countries accounting for 36 per cent, offshore centres of 42 per cent and developed nations of about 22 per cent.

Among individual countries, Saudi Arabia accounted for 8.6 per cent of such funds, UAE (5.9 per cent), the UK (5.6 per cent) and Turkey (1.9 per cent).

Of the 253 banks in Switzerland, 229 recorded a profit in 2017, while the remaining 24 institutions recorded loss.

The number of banks in Switzerland declined again, from 261 at the end of 2016.

The aggregate balance sheet total rose by 4.8 per cent to CHF 3,249.4 billion.

Against the backdrop of regulatory requirements, the big banks transferred in-house services, together with the staff concerned, to non-banking group companies.

Since these companies do not have banking licences, the staff who work for them are not included in the bank statistics, the SNB said.

This led to a significant reduction in staff numbers at banks in Switzerland, falling by 10,427 to 1,10,413 staff in terms of full-time equivalents. In the domestic component, the total number of staff decreased by 7.7 per cent to 93,554, while the number abroad declined by 13.4 per cent to 16,858.

Meanwhile, money kept by Pakistani nationals in Swiss banks fell by over 21 per cent to a record low of CHF 1.115 billion (Rs 7,700 crore) in 2017, even as the same from India rose after three straight years of decline.

The Pakistani money in Swiss banks had fallen by 6 per cent to CHF 1.4 billion (about Rs 9,500 crore) in 2016. Before that in 2015, these funds had risen 16 per cent from CHF 1,301 billion at 2014-end.