Swiss Banks Alert: Sanctions Top Geopolitical Risk

Swiss banks identify international sanctions, particularly against Russia over Ukraine, as the most significant geopolitical risk to their business. A report suggests Switzerland needs to develop its own sanctions policy while remaining a safe haven. Concerns grow over the country's image and the potential for clients to withdraw assets.

A survey of Swiss banks has put international sanctions, especially those against Russia over Ukraine, at the forefront of geopolitical risks to their business operations.

The Swiss Bankers Association (SBA) and consultants zeb released a report on Thursday urging Swiss policymakers to develop a sanctions approach that maintains Switzerland's neutrality and its stature as a banking safe haven. In addition to sanctions, the report lists the ongoing Russia-Ukraine war and a potential U.S. debt crisis as major risks.

Following Russia's 2022 invasion of Ukraine, Switzerland aligned its sanctions with the EU, including freezing Russian assets. SBA deputy head August Benz expressed worries about the rapid adoption of sanctions and their unintended consequences. The Swiss economy ministry reported that, as of mid-August, frozen Russian assets amounted to 7.1 billion Swiss francs ($8.33 billion).

Bankers fear that Switzerland's stance on the Ukraine conflict could alienate foreign customers, especially from the global south, who might withdraw their assets. Benz suggested that Switzerland could emulate other financial hubs like Singapore and the UK in adopting tailored sanctions policies. The report also noted a decline in wealth inflow to Switzerland from certain countries.

(With inputs from agencies.)