Under the current economic conditions, it is especially important to take measures to protect your capital by depositing it in a secure bank located in a secure jurisdiction. Switzerland checks those boxes: it is rightfully thought of as the banking center of the world. It would be a perfect place for putting your personal or corporate assets.
However, before depositing money in a Swiss bank, you have to do careful research and learn about the opportunities that the banking sector in the country offers. In the article below, we discuss the interest rates that Swiss banks offer as well as some other possibilities to grow your wealth that are available in Switzerland.
Why should you put money in a Swiss bank?
The Swiss banking industry is centuries old. Today, it is one of the main sectors of economy in the country and one of its symbols together with cheese and chocolate!
Over the years, Switzerland has earned a perfect reputation due to its neutrality, carefully preserved sovereignty, a stable political situation, and banking privacy principles. These factors make Switzerland attractive for wealthy people from all countries of the world who deposit their fortunes in Swiss banks. Here are the main reasons why HNWIs choose Swiss banks:
- Historically, the Swiss franc exchange rate has been least susceptible to fluctuations. It is one of the most stable and secure currencies in the world.
- Swiss banks offer a very high level of banking privacy protection. The legislation of the country strictly prohibits unauthorized disclosure of banking information. Any violations of this requirement will lead to punishment in the form of a fine or imprisonment.
- The banking system in Switzerland is extremely stable. You can be certain that the money that you keep in a Swiss bank is 100% secure. First, all the bank deposits in the country are insured for 100,000 Swiss francs. Second, even if a particular bank collapses, it will be taken over by a healthy bank (or a bank group) so the clients of the bankrupt bank will incur no losses at all.
The procedure of opening an account in a Swiss bank can seem complicated and the compliance requirements are tough. Nevertheless, the number of international clients that Swiss banks take onboard is not falling. The reason for this is the wide range of opportunities that foreign nationals can make use of if they sign up for the services of Swiss banks.
Opening a bank account in Switzerland: key terms and conditions
As you probably know, the more secure is the bank, the lower interest rates it offers to the clients. This is an indicator of the conservative credit and investment policies implemented by the bank administration. Rather than making any risky loans, Swiss banks care about the security of their clients’ deposits. So the interest rates that Swiss banks offer are low but the security level is high.
You can open a bank account in Switzerland not only in Swiss francs but also in such currencies as EUR, USD, GBP, CNH, and others. In many banks, you can also make a deposit in Australian, Canadian, or New Zealand dollars, Norwegian krones or Russian rubles.
Large banks in Switzerland require substantial initial deposits of 250,000 to 500,000 francs. Smaller banks in the country will provide services to the client who deposits 50,000 francs (or the equivalent in another currency).
You also have to take into account the fees and commissions that the bank charges. Their amounts will depend on how large your deposit is, first of all.
On average, Swiss bank clients should expect to spend between 500 and 2,500 CHF per year on maintaining their bank accounts. We will be happy to give you a free consultation on the best offers that Swiss banks make.
What affects the interest rates in Switzerland?
The interest rates that banks in different countries offer depend on the base rates set by their Central Banks. Currently, the base rate in the UK, for example, is 0.1% and the base rate in the USA is 0.25%. The base rate in Switzerland is negative at -0.75%.
The interest rate the bank can offer to the client will also depend on the amount of money that the latter deposits there and – indirectly – on the client’s nationality. The same holds for bank’s fees and commissions. Most banks in Switzerland today charge negative interest deposits.
Maximum interest rates available in Swiss banks
At the moment when this text is written, the maximum available interest rates in Switzerland are as follows:
|USD||1-3 months — 0.25% per year|
|CNH||1-12 months — 1% per year|
Of course, the rates are higher on some currencies. The interest rate is fixed for the term of the deposit and it can be reconsidered when the term expires.
Other opportunities that Swiss banks offer
As you can see, people don’t deposit funds in Swiss banks for purposes of earning interest, but rather for security. However, there are other opportunities offered by Swiss banks that can certainly make them more attractive for a foreign investor.
- Brokerage account. You can operate a trading account with a Swiss bank and use it to trade in finance instruments. The bank can advise you on this. The return on such an account can easily be 10% per year or even more.
- Discretionary mandate. You can also open an investment account with a Swiss bank. Your private banker will use the money to make investments following your instructions. You can instruct the manager to be more or less conservative in his/ her investment and this will have a direct bearing on the profits and losses that you might make.
- Private banking. If you put a hefty sum of money in a Swiss bank, you will gain access to private banking services. With private banking, a Relationship Manager is assigned to you and with his/ her assistance, you can manage your capital in a most efficient way. Of the 251 banks in operation in Switzerland, 110 offer private banking opportunities.
- External asset management. External asset management service is an option that iss probably the best deal for more sophisticated investors. An external asset manager (EAM) is effectively a freelance financial adviser. An EAM will charge a commission, of course, but s/he will not have to pursue the bank’s interests in his/ her actions – but rather, the client’s interests. Besides, EAMs normally cooperate with more than one bank so they are in a position to compare the opportunities that each bank offers and recommend the one that looks most promising to the client… or even open multiple custody accounts.
The interest rates in Swiss banks may be low but there are certainly other ways in which you can use them to protect and grow your wealth. Private banking and external asset management can prove extremely efficient instruments in increasing your capital. You have to realize, however, that Swiss bankers will not provide services to every Tom, Dick, and Harry: they will take you onboard by personal introduction only.
Offshore Pro Group is an Eligible Introducer and we closely cooperate with many Swiss banks. As we have been introducing only reliable and law-abiding clients to them, the Swiss bankers trust us and follow our recommendations. Using our services you can become a client of a secure Swiss bank. You are welcome to contact us by email, live chat, or a messenger. We always respond quickly!