ANALYSIS: How the latest banking scandal has damaged Switzerland's reputation
As the Swiss banking sector is rocked by yet another scandal, with the publication of damaging allegations against Credit Suisse by international media, reactions in Switzerland have ranged from outrage to defensiveness.
In one camp are those who are appalled at the bank’s alleged bad practices.
They focus on the fact that Swiss media were not free to participate in the investigation because of restrictive banking secrecy laws.
They’re also calling for higher penalties for Swiss banks involved in wrongdoing.
In the other camp are the ‘play-it-down’ team who believe that Switzerland is often unfairly singled out.
They argue that the problem of illicit assets is a global one, and other financial centres have a worse record than the Swiss.
There are even some murmurs about deliberate targeting.
With all these arguments going on, there isn’t much concentration on the actual substance of what was revealed.
And that’s partly because the revelations don’t sound that new to Swiss observers.
The global investigation involving 48 media outlets, led by Germany’s largest daily newspaper the Süddeutsche Zeitung and the Organized Crime and Corruption Reporting Project (OCCRP), is based on a data leak of more than 18,000 accounts, “the largest leak ever from a major Swiss bank”.
The data relates to clients from the 1940s to relatively recently.
The journalists found dozens of accounts that belonged to corrupt politicians, criminals, spies, dictators, “and other dubious characters”.
These were not obscure names but people whose tainted background could easily be established by a Google search, according to the consortium.
The accounts identified as potentially problematic held over $8 billion (CHF 7.33 billion) in assets. Credit Suisse, Switzerland’s second largest bank after UBS, has 1.5 trillion Swiss francs under management.
One thing everyone agrees on – the timing of these revelation is terrible for Credit Suisse.
In the past year it has been caught in a whirlwind of bad news – costly scandals involving bribery in Mozambique, a Bulgarian drug ring and two collapsed funds Archegos Capital Management and Greensill Capital. But Credit Suisse has come out fighting in response to the current exposé, dubbed Suisse Secrets.
The bank said it received “numerous inquiries” from the consortium over the past three weeks, and reviewed a large volume of accounts “potentially associated with the matters raised”.
In a statement, the bank claimed that 90 per cent of the reviewed accounts are today closed or were already in the process of closure.
“Of the remaining active accounts, we are comfortable that appropriate due diligence, reviews and other control related steps were taken in line with our current framework.”
This defence that the bad practices took place mainly in the past and are not reflective of current standards has been echoed by several industry commentators.
They also make the point that Credit Suisse, or Swiss banks, are by far not the only offenders historically.
In an interview with Swiss Public Radio, finance journalist Myret Zaki said the revelations should be seen in the context of a wider economic war.
“We should know that money laundering is a gigantic operation involving sums of money that are infinitely greater than what Switzerland can handle and which are not well monitored elsewhere.”
Claude Baumann, publisher of finews.com, wrote in an editorial: “The impression these new accusations give is that they are a concerted attempt to not only discredit Credit Suisse, but all of Swiss finance.”
Other Swiss media, notably 24 Heures and the Tages-Anzeiger newspapers, have taken a different tack, expressing frustration at the “absurdity” that they are prevented by Swiss law from doing their jobs.
“Switzerland sees itself as a model democracy, which it is not when dodgy money that transits the country can no longer be questioned,” Ariane Dayer wrote in 24 Heures.
At a political level, there may be some repercussions in parliament in the coming months regarding reporting restrictions, if the Social Democrats and Greens get their way.
The Social Democrat Prisca Birrer-Heimo was ahead of the curve, submitting a motion last December calling on the government to give the Swiss financial regulator Finma the power to impose fines. Her motion was co-signed by politicians from Green Liberals and the Centre.
Overall, the reputational damage is probably worse abroad than at home. The Swiss public is somewhat inured to big splash revelations of wrongdoing in its banking sector – especially historical wrongdoing.
But, after Swiss financial institutions have already appeared in such a bad light in the dramatic Panama, Paradise and Pandora investigations, Suisse Secrets keeps that negative image going strong globally.