Franc replaces banks as main economic concern
BERN: The Swiss economy performed a steady if unspectacular recovery in 2010, but now faces an uncertain 12 months ahead in the face of a continued European debt crisis.
While regulators and the government were busy restoring stability to the financial sector, the economic woes of European neighbours sent the franc spiralling through the roof to the detriment of Swiss exporters.
There was a distinct lack of champagne bottles being uncorked during the festive season last year, but the financial sector was still left with a major hangover at the start of 2010. A government deal between Switzerland and the United States to release the details of thousands of UBS account holders was challenged in the Swiss courts in January, while parliament had yet to rubber stamp the controversial plan.
To make matters worse, stolen Swiss bank data was being bought by European governments despite Switzerland agreeing to renegotiate double taxation agreements.
But parliament agreed to the UBS deal in the summer. And the autumn saw Germany and Britain agree in principle to deals that could preserve Swiss banking secrecy and solve the thorny issue of tax evaders hiding money in Switzerland.
By this time, the heat on Switzerland had cooled considerably as powerful countries found they had other problems to address.
Regulators were also working hard to strengthen the foundations of Swiss banks. Following the lead of international counterparts, the Financial Market Supervisory Authority (Finma) added a "Swiss finish" to revised global standards to compel domestic banks to hedge risks even more stringently than international competitors.
It remains to be seen what measures are adopted by the international financial community and what effect they have on the landscape. But there were encouraging signs that Swiss banks were starting to return to health during 2010. UBS, Europe's worst hit bank from the subprime financial meltdown, recorded a profit in the final quarter of 2009. The trend was continued for the first nine months of 2010 and the bank has also managed to stem the tide of assets withdrawn from its wealth management business. -PB News