Swiss Finance: Capital Markets, Banking, and the Swiss Value Chain

Praise for Swiss Finance

"An outstanding presentation of the political, legal, and economic constituents that have contributed to Switzerland′s prominent position in international financial markets."
Prof. Peter Gomez, Chairman, SIX Group; former president, University of St. Gallen, Switzerland

"An excellent portrayal of Switzerland′s role in the international financial market landscape. The Swiss finance market has been built up over a long period to satisfy the needs of investors around the world and is based on trustworthy institutions and the country′s stability."
Karl Reichmuth, Chairman of the Board of Directors, Privatbankiers Reichmuth & Co., Switzerland

"Swiss Finance explains why Switzerland has become the world′s leading wealth administrator, showing the strong interplay among political stability, safety, rule of law, and direct democracy. One can only imagine how much better off the global economy would be today if Switzerland′s capital markets were the ′norm′ rather than the ′exception′!"
Jay Flaherty, Chairman and CEO, HCP, Inc.; former managing director, Merrill Lynch

"Swiss Finance is an outstanding guide to the strengths and weaknesses of the Swiss financial value chain. One of the major challenges here and throughout continental Europe is the lack of risk capital for young innovative firms. With great expertise and passion, this book calls for joint efforts of politics and finance to create new chances for innovation and economic growth in global competition. A must–read!"
Prof. Heinz Riesenhuber, former Federal Minister of Research, Germany; Member of German Parliament

"Swiss Finance derives its strengths from its limitations. Because Switzerland had a small internal market, its companies had to globalize before others, hence the strengths of the Roches and the Nestlés of Switzerland. Because the immediate users of the Swiss financial markets were scarce, Switzerland had to offer to all legitimate companies a market where efficiency, transparency, and predictability would be the hallmarks. Swiss Finance is the seminal treatise on the Swiss financial markets, which have transcended their domestic nature to be not only the model but also the beacon of corporate finance done the right way."
François Maisonrouge, Managing Director, Evercore; former managing director of investment banking, Credit Suisse

"Swiss Finance provides a comprehensive, thoughtful, and thought–provoking assessment of Switzerland′s role in global finance. It strikes a smart balance between Swiss self–confidence and pride grounded in stellar achievements as well as humility and respect in light of past failures and serious challenges ahead."
Dr. Peter Wuffli, Chairman, IMD; former CEO, UBS Group

"This book provides a superb overview of the history and challenges of the Swiss financial system, its political and institutional foundations, and the reasons for its continuing success."
Mark Tracey, Partner, Arkle Associates; former partner, Goldman Sachs

Preface ix

Introduction 1

1 Finanzplatz Schweiz 7

2 The Swiss Banking System 37

3 Swiss Banking Secrecy 97

4 Swiss Institutional Investors 151

5 Swiss National Bank and Monetary Policy 181

6 Swiss Francs in the Global Exchange Markets 209

7 Swiss Debt Markets 243

8 Swiss Equity Markets 275

9 Swiss DerivativeMarkets 311

10 Swiss Taxes on Investment and Financing 349

Conclusion and Outlook 365

About the Authors 373

Index 377

Dr. Henri B. Meier is a cofounder of HBM BioVentures AG, HBM Partners AG, BioMedInvest AG, and BioMedCredit AG, which are among the global leaders in biotech venture capital firms. For the past twelve years, since his retirement from Roche Holdings, he has been active in helping and advising young entrepreneurs start new companies and foundations. Over the course of his distinguished career, he has held positions as an economist and financial analyst, as well as investment officer, at both International Finance Corporation and the World Bank in Washington, D.C.; a member of the Executive Committee of Handelsbank National Westminster (Zurich); and CFO, member of the Roche Group Executive Committee, and member of Roche′s Board of Directors. Among Meier′s many awards during this period were multiple recognitions as Switzerland′s top CFO and recipient of the European CFO Excellence Award in 1999. He holds a master of economics and business administration degree and PhD from the St. Gallen School of Economics, Switzerland.

Dr. John E. Marthinsen is Professor of Economics and International Business at Babson College, where he holds the Distinguished Chair in Swiss Economics of the Glavin Center for Global Entrepreneurial Leadership. He has extensive consulting experience, working for both domestic and international companies, as well as the U.S. government. Marthinsen has served on the United Nations Association′s Economic Policy Council and lectured at the Universities of Bern and Basel in Switzerland and the University of Nürnberg, Germany. From 2000 to 2009, he served as a member of the Board of Directors of Givaudan SA, a Swiss–based flavors and fragrances company. Among his most recent books are Risk Takers: Uses and Abuses of Financial Derivatives, Second Edition and Managing in a Global Economy: Demystifying International Macroeconomics.

Dr. Pascal A. Gantenbein is the Henri B. Meier Professor of Financial Management at the University of Basel′s Center of Economic Sciences (WWZ). He also acts as a consultant in the fields of real estate portfolio management, asset management, and real estate institutions. Gantenbein has been a visiting professor with several academic institutions worldwide and was formerly assistant professor of business administration and finance at the Swiss Institute for Banking and Finance at the University of St. Gallen. He also received his master′s degree and PhD from the University of St. Gallen.