The collapse of Bank of China’s planned investment in a French private bank is not a serious blow to the Chinese lender’s ambitions.

It is safe to assume that BoC was rather happy to be told by its main shareholder and regulatory master – the Chinese state – that it was not allowed to overpay for an asset that had depreciated since the full force of the crisis hit the financial industry last year.

This is not the first time Beijing has saved a Chinese financial institution from an investment that became less attractive.

But coming on the heels of other deals blocked by the Chinese government, it could help create an obstacle for future offshore investments.

If companies become worried that deals will fall down at the last hurdle because of the whims of Beijing, they could start to demand a risk premium.

They could start to ask for non-refundable down-payments or higher prices from Chinese bidders to offset the risk that Beijing will reject the deal when other bidders have moved on.

That assumes there will be other bidders besides the cashed-up, relatively healthy Chinese banks and insurers that are interested in investing in western financial institutions.

Swiss caught off guard

Despite Nicolas Sarkozy’s threats to walk out of the G20 summit, the French president was there for the closing ceremony.

The great absentee was Switzerland, which is not part of the G20 and which has been the focus of a campaign by Mr Sarkozy and many of the other G20 leaders to clamp down on tax havens and banking secrecy.

It is understandable that Switzerland feels it is being tried in absentia with no opportunity to defend itself.

The Swiss consider they are being unfairly singled out by some of the biggest nations whose own dependent territories and tax-friendly jurisdictions, trusts and Delaware companies are even more questionable.

The view in Zürich and Basel is that the campaign is nothing less than a commercial war to undermine Swiss dominance in wealth management.

That said, Switzerland could have only itself to blame. You don’t get what you deserve but what you negotiate. Swiss politicians and financial regulators have negotiated badly.

Over the scandal of the UBS American bank accounts, the Swiss Federal Council looked like a rabbit as the car bears down with headlights blazing.

US clients, who had placed their confidence in UBS and whose names were handed over to the US tax authorities even before Swiss due legal process was completed, have a right to feel betrayed.

Nobody would ever have recruited a Swiss Guard if they had thought that in “difficult circumstances” they might cut and run.

The only reason anyone paid top money – which the Swiss banks have always charged – for Swiss Guards and regiments to protect them was the certainty that on the day they would perform, whatever the cost. The flag of the French king’s personal bodyguard, the Hundred Swiss, carried the motto Ea est fiducia gentis (“such is the loyalty of this people”).

One episode in the history of the Swiss Guards was their defence of the Tuileries in Paris during the French Revolution. The regiment made a heroic stand with 500 members massacred by the mob.

They could have thought better of it. They could have looked at their contract with the French monarch more carefully. They could have decided they had promised to defend an “absolute” monarchy and not a “tyrannical” one and were accordingly going home, suggests John de Salis, a Swiss banker.

It would have been a bit like Swiss bankers saying today that we can release some names because they involve “fiscal fraud” and not “tax avoidance”, which is still not a criminal offence in Switzerland.

Perhaps the Swiss should be following the example of their military ancestors and fighting with greater determination the efforts to consign their banking industry to history.

In their campaign against tax havens, the G20 governments appear engaged in a diversionary tactic to camouflage their lack of agreement on more pressing issues. Switzerland is the highest profile victim.

These governments believe there is public support to flush out tax evaders. But thinking ahead, their electors may want to be a little more cautious. It is easy to see this campaign as a first step in greater government intrusion in people’s private affairs.

The notion that all bank information could eventually be freely shared by all countries is something not only the rich will feel uncomfortable about. There might still be a role for the old Swiss Guard.

world.view@ft.com

Get alerts on Companies when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article