Over the past 12 months, Switzerland’s private banking sector has been struck by a series of dramatic upheavals.

In February last year, Wegelin, the country’s oldest bank, caused shockwaves when it became the first foreign bank to be indicted by the US authorities for aiding tax fraud.

A year later, the 272-year-old institution shocked the Swiss finance sector again, firstly by saying it would close after pleading guilty to helping wealthy Americans avoid taxes on assets worth $1.2bn, and secondly by saying that “such conduct was common in the Swiss banking industry”.

For the 10 or so more Swiss banks – including Credit Suisse, Julius Baer, the Zürcher Kantonal Bank (ZKB) and HSBC’s Swiss subsidiary – currently being probed by various American regulators, that allegation was alarming. Indeed, the president of the Swiss Socialist party, Christian Levrat, described it as a “catastrophe” for the country’s banking industry.

Tuesday’s move by Pictet and Lombard Odier to drop their traditional structures as unlimited partnerships in favour of a corporate partnership was less dramatic, but still counts as the latest aftershock from those upheavals – and a significant one at that.

“I think it is fair to say that, even if they don’t admit it, the Wegelin case certainly had a catalytic effect on the other banks,” says Rainer Skierka, an analyst at Bank Sarasin in Zürich.

The changes, which will mean that the managing partners of Pictet and Lombard Odier will no longer bear personal liability for the banks’ actions, represent a significant break from a banking model that has survived for more than two centuries, and whose strength and durability lay in reassuring clients that their interests and those of the partners managing their money were nicely aligned.

Both Lombard Odier and Pictet insisted on Tuesday that their move would do nothing to upset this delicate equilibrium. “This evolution is essentially legal in nature. The new entity will automatically succeed the old one, and will continue to offer exactly the same services,” Lombard Odier said in a statement.

However, Laura Empson, a professor at Cass Business School and an expert on partnership structures, argues that an unlimited partnership focuses the minds of partners in a way that is impossible to replicate in a situation where their liability is limited.

“Any professional who has been in a situation where they were up against the wall in an unlimited partnership would admit that the shock of discovering they were personally liable is something that they will never forget,” she says.

The banks, however, are adamant that the changes will not lead to more risky behaviour, insisting that their tradition of prudence and personal responsibility will not change.

“All of the capital is owned by the partners and therefore we are totally committed for the long term,” says Jacques Saussure, a senior partner at Pictet. The bank also stressed that it would continue to hold capital “well in excess” of Switzerland’s already stringent legal requirements. For the rest of the Swiss private banking sector, the decision by Pictet and Lombard Odier – the two largest proponents of this model of banking – raises pressing questions.

“The other smaller banks with this model will certainly be considering whether or not to follow suit. Whether they do depends on their precise circumstances, however,” says Mr Skierka, pointing out that the scale and number of partners at banks varied.

However, with prosecutors in the US emboldened by the Wegelin case – Preet Bharara, US attorney for Manhattan described it as a “watershed moment” – the risks for partners at banks with unlimited liability are significantly higher than they have been in the past.

Swiss bankers will be hoping that negotiations between the Swiss and US governments on a universal settlement to the tax disputes, delayed last year by the American electoral calendar, reach a conclusion sooner rather than later.

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