“I expect a reduction of about 10 percent of banking jobs by the end of next year,” Eduardo Leemann, vice-president of the Foreign Bank Association (Auslandbankenverband), told the SonntagsZeitung newspaper.
Measured against the 108,000 current banking jobs in Switzerland, this would mean a cut of more than 10,000 jobs.
Until now, only banking giants UBS and Credit Suisse have announced 900 job cuts in Switzerland out of a worldwide total of 5,500.
However, according to the Zürich banker Thomas Matter, other institutes are also at risk.
“Apart from the big banks, foreign banks are especially in danger,” he said. “Excessive salaries must eventually come down.”
Among the reasons for cost pressure at Swiss banks, according to SonntagsZeitung, are the easing of banking secrecy, increasing regulation, ongoing recessionary markets, the strong franc and lack of bank productivity.
“Banks must repeat what happened in the insurance industry ten years ago,” said Claudio Segovia, an economist at the research institute BAK Basel Economics. “The banks are not productive enough.”
Running at about 250,000 francs ($307,300) per employee, value creation at banks is well under that of insurance companies, with 350,000 francs ($430,000) worth of transactions per head.
Due to the tax deals recently announced with Germany and the UK, banks are expected to have increased costs of half a billion francs. In addition, a quarter of the assets under management will disappear because of taxes.
“Banks can only reduce bonuses or let people go if they want to avoid costs spiralling out of control,” said Iqbal Kahn, head of banking and capital markets at Ernst & Young.
The existence of private banks with a high percentage of foreign customers and assets under management of less than 10 billion francs ($12.3 bn) is being questioned by experts.
“Small banks will find ways of coming together, to use economies of scale”, said Kahn.
According to Eduardo Leemann, the winners will be the institutes that switch early to clean money and reinvent themselves.
“The positive thing in the crisis is that there will be new opportunities. Only banks with a credible business model will survive,” he said.