Zurich bank cuts Cuba’s last Swiss franc channel

Zurich's cantonal bank is halting all transfers to Cuba starting next month to avoid activities deemed in violation of a US embargo on the communist-ruled island.

Zurich bank cuts Cuba's last Swiss franc channel
Zurich cantonal bank headquarters on the Bahnhofstrasse. Photo: ZKB

"Starting on May 1st, the Zürcher Kantonalbank will cut all business relations with Cuba," the bank said on Tuesday in an email sent to AFP, confirming Swiss news reports.
"The bank is part of an international network and must respect international economic embargoes and restriction lists," it explained.

Bank spokeswoman Evelyne Brönnimann told AFP that new rules meant ZKB must now attest to its banking partners in the United States that its activities are in line with the US Office of Foreign Asset Control (OFAC) rules.
"If this is not the case, the United States can take actions against the 
banks like freezing their holdings," the bank statement said.
A number of international banks have been slapped with multi-million-dollar 
fines in the past year for flouting US sanctions on Cuba, as well for transactions with Iran, Libya, Myanmar and Sudan.
The bank said its decision would impact 12 clients, but did not provide 
details on who they were.
The head of the Swiss-Cuban Chamber of Commerce, Andreas Winkler, however, 
told AFP the move would especially affect small and medium-sized Swiss companies and non-governmental organisations (NGOs) that dealt with Cuba.
Winkler harshly criticised ZKB's decision, lamenting that the bank was 
removing the only banking channel operating in Swiss francs.
"Now operations will need to go through European banks that operate in 
euros," he said, pointing out that the extra exchange process would end up costing businesses more money.
He also questioned whether ZKB was actually required to cut business ties 
with Cuba under the OFAC rules, since it is not a US bank, or whether it was just playing it safe.
Washington has faced international criticism since it imposed its embargo 
on Cuba more than five decades ago.

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Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site 

Holders of other, temporary or conditional permits are not accepted.

READ MORE: ‘A feeling of belonging’: What it’s like to become Swiss

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.