Swiss bankers faced with dilemma of over-regulation

Criticism by Swiss bankers of the costly regulation of their sector rarely lets up, even though it is often the industry itself that is first to call for more rules.
Two seminars were held last week in Switzerland on the subject, bringing together officials from the Swiss banking association and the Federal Banking Commission, the industry's regulator.
The rules Swiss banks are required to follow, either under Swiss national law or regulations imposed by international organisations, make up "millions of pages", said Konrad Hummler of the Wegelin private bank.
"Is it worth it, is the world better thanks to the rules?" he asked Thursday evening at a debate organised by the Swiss Bankers Association.
These regulations, which banks are required to follow closely, have a financial cost of 24,000 Swiss francs (19,051 dollars, 15,863) per year per employee for small banks and 11,000 francs for big banks, said president of the Swiss Private Bankers Association Niklaus Baumann.
During the general assembly of the association Friday in Lausanne, Baumann said that costs related to regulations make up 9.8 percent of the total costs of a small bank and 4.1 percent for a big bank.
The requirements involve mainly internal investigations when there is a suspicion of money laundering.
The Swiss always strive to be perfectionists, said Urs Roth, the secretary general of the Swiss Bankers association.
"In France, the European directive against money laundering still has not been incorporated into the (national) laws," he said.
The Federal Banking Commission responds to criticism of over-regulation saying that it is the banks themselves that ask for the rules, because they do not want to take risks.
"There must be courage to confront lacunae," FBC vice president Jean-Baptiste Zuffrey told private bankers in Lausanne.
He said banks live under the constant threat of being sued and as a result prefer protecting themselves behind a sturdy legal framework.
"The notion of total comfort takes precedence over risk," he said.
He also complained that Swiss banks often play with the law, especially when it is a question of repatriating foreign clients funds held in Switzerland.
As an example, he noted that the association had recently been contacted to determine whether three financial arrangements were legal or not.
"The best way to fight against over-regulation is to not make problems," he maintained.