Financial System of Switzerland
Transcript of Financial System of Switzerland
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WELCOME TO ourPRESENTATION
NAME ROLLNupur Ghosh 09
Marzan Ara Hira 10
Md. Mizanur Rahman 31
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FINANCIAL INSTITUTIONSANALYSIS OF SWITZERLAND
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Introduction
Switzerland is in the
central Europe
Capital is in Bern
26 Cantons
Swiss Federal State in
1848
Diversified culture
Switzerland
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Capital Market
Shares
Funds
EquityRights
Bonds
Longtermfunds
Debt
Securities
Swiss capital market has broad
deal sheet
It spans rights, offering bond
offerings, IPOs.
Swiss capital market regulation is
FINMA
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Capital market
If an investor carries out a long
term transaction, one will be in
capital market
Capital market gets together
supply and demand
capital market is a long term
financing in Swiss nationaleconomy
Banks and stock exchange are
characterized by uniform
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Money Market
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To cover short term peaks in
payment transaction, commercial bank
avail themselves in money market
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Money Market
Companies obtain financing in the money and
capital market. Capital producers and borrowers meet
Short term money are traded in Swiss money market
The Swiss National Bank(SNB) and commercialbanks avail in money market
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Swiss money market is also known
as interbank market that borrows
money from central bank
This loan are known as discount
loan, lombard loan, swap loan
Swiss money market depends on
interpersonal relationship between
lenders and borrowers
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Money Market Components
CommercialCompanies
InsuranceCompanies
Pensionfund
PublicInstitution
PrivateIndividuals
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Money Market
Short termDetermined
by SNB
This must adjustaccording to economiccondition
Medium and short termloans are available
share, bond, investmentfunds, mortgage loan areavailable.
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Swiss Bond Market
SIX Swiss exchange in Zurich is
principal stock exchange
SIX Swiss Exchange also trades
securities
Like Swiss government bonds and
derivatives (stock options)
Swiss market index consists 20
significant equity securities
It is based on free float market
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SWISS Stock Market
In 2004, SIX Swiss exchange rejectedmerger with German partners
The exchange has blue chip index asits principal
SMI comprises maximum 20 of thelargest and mid-cap SPI stock
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Foreign Exchange Trading
Equal TradingRights
TransactingPricing
Environment
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FOREX Trading Services
Attractive spreads
Security of the Fund
ECN (Electronic Communication Network) Liquidity
Wide range of trading orders
Instant Execution
Equal price and liquidity for all clients
Advanced trading technology
Sophisticated Analysis and news
Technological Stability
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National Financial Regulatory
Agencies of Switzerland
Swiss Financial Market Supervisory Authority (FINMA) is the
government regulatory body responsible for financial regulation.
It supervises banks, insurance companies, stock exchanges andsecurities dealers as well as other financial intermediaries.
FINMA is an independent institution with its own legal personality.
It is institutionally, functionally and financially independent from
the central Federal Administration.
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FINMA was founded on 22
June of 2007 with the passing
of the Federal Act on the Swiss
Financial Market SupervisoryAuthority.
FINMA has a special
regulatory dedicated to each ofthese two institutions.
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Overview of FINMA
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Functions and Responsibilities
of FINMA
FINMA
As a state regulatory body FINMA is endowed with supreme authorityover banks, insurance companies, stock exchanges, securities dealers andcollective investment scheme.
FINMA
It is responsible for combating money laundering
Conducts financial restructuring and bankruptcy proceedings.
FINMA
FINMA grants operating licences for companies and organizations subjectto its supervision
It monitors the supervised institutions with respect to their compliancewith the requisite laws, ordinances, directives and regulations.
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Organizational Structure of
FINMA
Organizational Structure of FINMA
FINMA is made up of a board of directors, anexecutive board and an extended executiveboard.
The Executive Board is FINMAs operational
management body and is responsible forensuring that banks insurance companies stockexchanges, securities dealers and otherfinancial intermediaries are supervised inaccordance with the law and respectivestrategy.
The Board of Directors is a strategicmanagement body and has seven to nineindependent expert members appointed viaparliament.
It decides on matters of substantial importanceissues, ordinances, and circulars and isresponsible for FINMAsbudget.
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Authorized Institutions of
FINMA FINMA maintains the following lists of all authorized institutions
and investment funds.
Authorized banks and securities dealers-
Name
Acrevels Bank AG
AP ANLAGE AndPRIVATBANK AG
Banca Arner Sa
Arvest PrivatbankAg
And Others
City
St.Gallen
Zurich
Lugano
Plattkon
Securities Dealer Type
Swiss SecuritiesDealer
Swiss Securities
Dealer Foreign-
controlledsecurities dealer
Swiss securitiesdealer
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Authorized Raiffleisen banks-
Name
Banca Raiffleisen Biasca
Banca Raiffleisen del BassoMendrisiotto
Banca Raiffleison delMoessano
City
Bellinzona
Chiasso/TI
Lostallo/GR
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Authorized representative offices of foreign
banks and securities dealers:
Banco calsxa Geral SA
Bank Happollam B.M.
BGC Brokers L.P.
NameGeneve
Zurich
Nyon
City
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Banks and securities dealers discontinuing their business
activities-
Name
Deka Finanz AG
NBF International SA
Sydbank AG in Liquidation
City
Zurich
Geneve
St. Gallen
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Investing in Switzerland
Switzerland is an attractive
destination for foreign investors
because of its economic and
political stability, its transparent
and foreign legal system, itsreliable and extensive
infrastructures and its efficient
capital markets. Moreover
many tax incentives are offered
by cantons(states), in order toattract companies to establish
operations and invest in their
jurisdictions.
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FDI in Switzerland
Foreign Direct Investment 2010 2011 2012 2013
FDI Inward Flow (million USD) 32,550 11,817 3,613 36000
FDI Stock (million USD) 617,703 644,912 665,596
Performance Index*, Ranking on
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Potential Index**, Ranking on 177 Economies - 30 -
Number of Greenfield Investments*** 533 532 391
FDI Inwards (in % of GFCF****) 29.7 8.8 2.9
FDI Stock (in % of GDP) 112.2 97.6 100.7
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Inward Foreign Investment
The stock corporation [
societe anonyme ( SA)/Aktiengessellschaft(AG)is the most widespreadform of businessorganization .
The limited liability company[societe a responsabilitelimitee (SARL)/ Gesellschaftmit beschrankter Haftung(GmbH0] has recently beenused more frequently becauseof its less stringent regulatorystructure.
Form ofcompany
preferred byforeign
investors
1. McDonalds Corporation,
2. IBM
3. Altria Group, inc. (PhillipMorris)
4. Johnson & Johnson Intl.,
5. Proctor& Gamble
6. Synthes,
7. Hewlett- packard inc.
8. Compaq,
9. Texas Pacific,
10. General Electric
11. Caterpilar.
Main foreigncompanies
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Procedures Relative To Foreign
Investment
Freedom of Establishment Guaranteed
Acquisition of Holdings Possible
Obligation to Declare No such declarations are not required, in
order to prevent the misuse of its very
liberal market framework, the SwissGovernment has introduced Due Diligence
Guidelines in the banking industry under
which banks must identify the beneficial
owner of the invested funds.
Competent Organization for theDeclaration
Federal Department of FinanceSwiss Federal Banking
Commission(SFBC)
Requests for Specific Authorizations Companies working in sectors like
banking and insurance need to seek
government permission to invest directly
in the country.
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Investment Aid
Forms of Aid Investment incentives are offered at thefederal and state levels, which could include:
Tax holidays or reduced tax rates up to ten
years. Subsidies on interest of bank loans .
Offering loan guarantees.
Privileged Domains Large scale investments in manufacturing andservice sectors with potential for job creation
are preferred.
Privileged Geographical Zones There are warehouses in the country where
goods can be imported duty-free as long as
these goods are subsequently re-exported.
Free Zones No free zones exist in the country.
Organizations Which Finance Swiss Agency for Development and
Corporation
Swiss Funds Association
Swiss Bankers Association
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Outward Foreign Investment
Although the global financial and economic crisis pushed the country into a
recession and triggered a sharp decrease of OFDI flows, the Swiss OFDI
stock continued to grow in 2008 and 2009. A well balanced economic
structure based on innovation and knowledge and coherent government
policies set the path for a sustainable growth of FDI.
Reasons behind Switzerlands Outward Foreign direct Investment
Small size of the country,
Natural shortages,
Geographic location.
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Switzerland: outward FDI flows, 2001-2009
(US$ billion)
Switzerland 2001 2002 2003 2004 2005 2006 2007 2008 2009
Economy 17 8 15 27 54 70 70 50 14
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Eurocurrency Market
The Eurocurrency market owes its existence to differences in
national financial regulation combined with declining barriers
to international capital movements.
The Eurocurrency market and its offspring- the Eurobond,
Euro commercial paper and Euro equity markets comprise
some of the most financial innovations of the last 40 years.
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The Eurocurrency and Eurobond markets, virtually non-existent until the late 1950s, have grown to become major
centers of activity and in many instances the preferredmarket for raising or investing funds.
The Eurocurrency market is the market for deposits
placed under a regulatory regime different than theregulations applied to deposits used to execute domestictransactions.
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Eurocurrency is used for lending and borrowing. The Eurocurrency
market often provides a cheap and convenient form of liquidity for
the financing of international trade and investment.
The main borrowers and lenders are the commercial banks, large
companies and the central banks.
Although Eurocurrency banking originated in Europe, today thereare market centers scattered around the globe. These centers are
linked by high speed communication lines so that there are very few
hours during which euro banking business is not being transacted.
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Types of Financial Market
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Major Types of Financial
Institutes
Banks
Insurance
Broker-Dealer
Asset Manger
Fund Providers
Specialist Financial Service Providers
Stock Exchanges
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Number of Financial Institutes
Financial Institutes Numbers
Banks 325
Insurance 224
Broker-Dealer 343
Asset Manager 124
Audit Companies 12
Authorized Financial Intermediaries 292
Rating Agency 16
Stock Exchanges 186
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Numbers of Financial
Institutes(Banks)
Banks Category Number Balance Sheet Total
Cantonal Banks 24 403,548
Large Banks 2 1,444,799
Regional Banks and Savings Banks 70 92,276
Raiffeisen Banks 1 139,520
Other- Commercial Banks 0 0
Other-Stock Exchange Banks 49 138,424
Other-Consumer Finance and other banking Intuitions 9 58,745
Other-Foreign Controlled Banks 123 327,811
Branches of Foreign Banks 33 23,891
Private bankers 14 39,211
Total 325 2,668,225
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The Five Major Banks
The Top 5 Banks of Switzerland are:
1. UBS
2. Credit Suisse
3. Cantonal Bank
4. Pictet and Cie
5. Bank Julius Baer
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UBS (United Bank of
Switzerland)
The largest Swiss bank and has a major globalpresence.
In 2010, it was the tenth largest bank in the world, with$1.8 trillion dollars of assets under management.
It had offices in 50 countries and over 64,000
employees.
Known for its private wealth management but also hassignificant investment banking operations.
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Overview of UBS
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Credit Suisse
Credit Suisse is another major bank in Switzerland, with $1.1trillion of assets under management in 2010.
The company had over 50,000 employees worldwide in 2011.
Credit Suisse is viewed as more of an investment bank,
providing advice to corporations on mergers and acquisitionsand debt and equity offerings.
The company also has a significant sales and trading operationto power its revenue and profit.
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Overview of Credit Swisse
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Cantonal Bank
The Cantonal Bank has 24 subdivisions for each canton, or state, inthe country.
Each bank is primarily owned by the canton where it is located.
In total, the banks had about $400 billion in assets undermanagement in 2010.
These banks are primarily retail-oriented for the common Swiss
citizen.
They typically do not engage in risky lending and do not extendtheir product lines or expand internationally.
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Pictet and Cie
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Pictet and Cie
Pictet is Switzerland's largest bank catering to high-end clientle andfocused completely on asset management.
The company does not engage in any investment, retail or
commercial banking.
the firm focuses on placing its clients assets in hedge funds, privateequity and other investment vehicles.
Overall the company managed about $380 billion in 2010.
Unlike most banks, which are corporations, it is a partnership ownedby eight individuals.
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Overview of Pictet and Cie
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Bank Julius Baer is another private bank focused on
wealthy clientle.
The firm focuses on Europe and Asia, with offices in 20
countries and over 3,500 employees in 2011.
Founded in 1890, the company had about $183 billion
assets under management by the end of 2010.
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Overview of Bank Julias Baer
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The Five Non Bank Major FIs
1. Six Swiss Exchange (Stock Exchange)
2. Swiss Insurance Companies (Insurance)
3. 3V Asset Management AG (Asset Management)
4. A. Strasser & Co. (Authorized financial intermediaries)
5. Balmar-Etienne AG (Audit Companies)
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Major Types of Products
Major types of products offered by the financial institutes:
1. Shares
2. Bonds
3. ETFs & Bonds4. Exchange Traded Products
5. Listed Derivatives
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Shares
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Bonds
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ETFs & Bonds
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Exchange Traded Products
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Listed Derivatives
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