Swiss chief says Singapore banks give more secrecy

Singapore should expect tougher international scrutiny of its banking secrecy rules, as the Asian city-state continues to expand its wealth management and private banking businesses, according to the chief executive of the Swiss Bankers Association.

Comparing Switzerland and Singapore, Urs Roth said in an interview with the Financial Times: “Singapore is not getting as much attention at the moment, perhaps because they are still smaller than Switzerland. But I would guess that it is a question of time.”

Speaking in Hong Kong at the end of a tour of Asian financial centres, Mr Roth said Singaporean banking secrecy provisions “are probably even stronger than the ones in Switzerland”.

Switzerland has double taxation treaties with more than 60 countries and arrangements to provide information on request in cases of suspected fraud.

Mr Roth stressed that his comments did not reflect concern, at this stage, that Switzerland would lose business to Singapore. Overall, he suggested, the focus of banks on wealth management was likely to rise as other activities took a bigger hit.

“We are not afraid that Switzerland will lose out, but other hubs will be built up because wealth management is a robust and growing business and not as volatile as other types of businesses,” he said.

“Singapore is predominantly an Asian hub, in the region that has the highest growth rate. We don’t see, at this point in time, a large amount of money going to Singapore from Europe, but that might change over time.”

Banks in Singapore have between 10 and 15 per cent of the asset base of those in Switzerland. However, Switzerland has recently come under renewed attack over its banking secrecy following a German tax evasion investigation that involved accounts in neighbouring Liechtenstein.

Germany’s finance minister, Peer Steinbrück, last month referred to Switzerland as an uncooperative tax haven, even though it applies a European Union withholding tax on interest from savings of non-residents.

Separately, UBS is the target of a determined investigation by US tax authorities regarding its offshore banking activities for wealthy Americans.

Mr Roth said German criticisms had been “political statements” and did not seem likely to lead to action against Switzerland.

“Germany, as far as we can see, relies on the EU to take whatever action is adequate, and on the EU level there is a proposal to revise the savings tax directive. But any revision has to be agreed upon by the 27 EU member states,” he said.

Mr Roth urged EU finance ministers not to tighten tax legislation to a level that would encourage customers to move more of their assets out of Europe. “It does not make a lot of sense for Europe to chase customers away,” he said.

“Does it make a lot of sense to support banks in these difficult times with quite significant amounts of government money, and at the same time worsen the competitive environment? Really, that is not a very clear idea.”