Areas of business in Swiss banking
Switzerland’s banks offer a comprehensive range of products and services to meet the needs of private customers, companies, institutional investors and public-sector entities. These can be divided into five general areas of business. Different banks assume different roles vis-à-vis their customers. Depending on customers’ needs, they utilise their balance sheet, infrastructure or access to financial markets. In addition, banks act as advisors and information providers in all areas of business. The wide variety of banking products underscores the key role banks play for their customers and for the Swiss economy as a whole.
Overview of assets and investments under management
Some of the assets booked in Switzerland are managed via investment solutions (e.g. collective investment vehicles and mandates) with Switzerland as their production location. The broadly defined investment management industry in Switzerland is responsible for managing a total of CHF 5 tn. Asset management, including collective investments and discretionary mandates for institutional customers, accounts for CHF 3.3 tn of this. The remaining CHF 1.7 tn is attributable to discretionary and advisory mandates for non-institutional customers – mainly private customers – and advisory mandates for institutional customers.
Fig. 2
Segmentation of assets by beneficial owner 2021
Note: relative sizes are indicative, deviations due to rounding differences. According to the Swiss National Bank, total assets of CHF 8.8 tn are held at Swiss banks by the end of 2021. Their allocation to customer segments is based on figures provided by Boston Consulting Group.1 Corporate customers primarily use banking services that support their business activities. Institutional investors (e.g. pension funds) specialise in investing assets and primarily use investment services.
Source: Swiss National Bank, Boston Consulting Group, Institute for Financial Services Zug, Asset Management Association Switzerland, Swiss Bankers Association
Fig. 3
Investments managed in Switzerland 2021
Note: relative sizes are indicative.
Source: Swiss National Bank, Boston Consulting Group, Institute for Financial Services Zug, Asset Management Association Switzerland, Swiss Bankers Association
Fig. 4
The Swiss financial centre is tightly interconnected 2021
Note: relative sizes are indicative.
Source: Swiss National Bank, Boston Consulting Group, Institute for Financial Services Zug, Asset Management Association Switzerland, Swiss Bankers Association
Synergies between areas of business
The overall picture is one of a financial sector characterised by huge overlaps. The various customer segments benefit considerably from the concentration of expertise in investment management. At the same time, private customers’ assets generate strong demand for investment know-how. This results in synergies and advantages for both investor groups. The Swiss financial sector offers companies a broad range of financing opportunities, specific transaction services and access to the capital market. The job market, which allows experts to move between the various functions, also plays an important role in terms of knowledge transfer and shared understanding among market participants. This is currently evident, for example, with regard to sustainable finance, which was originally in demand mainly among institutional investors but is now very popular with private customers as well. In addition to the assets booked to commercial banks, the Swiss National Bank (SNB) holds foreign-currency investments totalling CHF 966 bn in cash and securities from outside Switzerland. However, these are booked to foreign central banks and the BIS rather than commercial banks. The SNB’s assets are therefore not included in the statistics on banks in Switzerland or in this publication, although its investment management expertise strengthens Switzerland’s investment know-how.
Overview of lending in Switzerland
Lending is a further cornerstone of the banking business alongside the management of assets. At the end of 2021, banks in Switzerland had CHF 1,514.2 bn in loans outstanding, with Swiss-based customers accounting for CHF 1,303.7 bn and foreign-based customers CHF 210.4 bn. Domestic lending is dominated by mortgage loans, which make up around 85% of the total. Over 46% of the mortgage volume relates to properties in four cantons: Zurich, Bern, Aargau and Vaud. The remainder of the overall lending volume comprises unsecured loans (primarily to customers in the financial and insurance industries as well as public-sector entities) and secured loans (primarily to private households as well as the financial and insurance industries).
Fig. 5
Lending business
Note: Credit volumes, proportional distribution 2021
Source: Swiss National Bank
Overview of the Swiss capital market
Fig. 6
The capital market is the most important source of financing for larger Swiss companies as well as the federal and cantonal governments, which can raise equity and debt capital on very favourable terms but must disclose their financial performance and other price-relevant information to do so. At the same time, the capital market offers investors and lenders a very broad range of options, from shares and bonds to investment funds, index funds, derivatives and structured products. Banks offer services and advice on access to the capital market on both the buy and sell sides. They also participate in the capital market themselves by providing specific financial instruments and, for example, taking up counterpositions on behalf of their customers for hedging purposes. Securities with a total value of CHF 2,000 bn are traded on the Swiss Stock Exchange. The market capitalisation of the broad-based Swiss Performance Index (SPI) in April 2023 was CHF 1,554.7 bn, while the Swiss Bond Index (SBI AAA-BBB) represented a total volume of CHF 481.2 bn. Other types of financial instruments are also traded on the Swiss Stock Exchange, including investment funds, structured products, derivatives and more. Changes in market capitalisation are caused by price fluctuations and, in the case of bonds in particular, new issuance and bonds maturing.
1 BCG has published its Global Wealth Report annually since 2001. The report aims to calculate the volume of global private financial wealth, forecast future growth and explain the implications and trends for wealth managers. It is drawn up using public-domain data sources, BCG models, expert opinions and a survey of wealth managers. BCG kindly supplies the SBA with detailed data for this report. The full Global Wealth Report 2021 is available at https://www.bcg.com/publications/2022/standing-still-not-an-option.