Why and how should non-residents set up bank accounts in Switzerland?
You must have considered opening an account with a Swiss bank. Swiss banks are well-known for their prudence and commitment to depositors’ protection. This reputation has been earned through centuries of bankers’ excellence in rendering quality services, competitiveness, stability.
But most likely, you find the task of setting up an account in Switzerland confusing and time-consuming if you are a non-resident.
However, it all depends on whether you are familiar with the policies and procedures of Swiss financial institutions.
A great advantage of the banking system in Switzerland is its concept of universal banking. It means that you may be offered a wonderfully wide range of commercial banking and investment banking services within one entity. Though some are more versatile than others, you can expect the following services in most banks:
- asset management for private and corporate clients
- investment banking services
- term deposits and savings accounts
- securities and precious metals trading
- cryptocurrency transactions
- family office services
- personal and corporate accounts
- investment advice
- payment transactions
- FX transactions.
Universal banks are available only in some countries. In most parts of the world commercial banks and investment banks operate separately, specializing either on deposits and lending, or trading securities and bonds.
As for Swiss banks, they have their impeccable way of rendering often sophisticated and discrete banking services.
This article discusses the most relevant questions and sums up the reasons why it is always an excellent and feasible decision to start banking in Switzerland. Besides, it explains how the Swiss banking system of depositor protection can become an effective guard of your capital protection and growth. Finally, it offers advice on how you can set up bank accounts in this beautiful advanced country.
Depositors protection after you set up bank accounts with a Swiss bank
According to FINMA (the Swiss Financial Market Supervisory), depositor protection in Switzerland is a three-tier system:
- preferential deposits
- protected deposits
- bankruptcy privilege
Before the financial crisis in 2008, the limit for preferential treatment and protection of deposits in Switzerland had been 30,000 Swiss francs per person per bank, In 2010, the limit was increased to 100,000 Swiss francs. The depositor protection system does not apply to the amounts above this limit.
In the case of a bank’s insolvency and bankruptcy, the unprotected part of the balances falls into the third category of debt claims – non-priority bankruptcy claims.
Different types of depositor protection for different classes of assets on Swiss bank accounts
Depositor protection depends on the asset class.
For example, if you have set up bank accounts and have Swiss medium-term notes and account balances in your name, your deposits can be classified as both preferential and protected. Therefore, at the time of the Swiss bank’s bankruptcy, the amount to be reimbursed will be the total outstanding balance on all your accounts (with consideration of the ‘per customer and bank’ rule). If the assets are on the foreign currency account, the value of the balance is assessed by conversion. For balances remaining on specific pillar 2 and 3a retirement accounts, there are other provisions: they are subject to preferential (tier 1) compensation, plus they will also fall under the second category of bankruptcy claims (privileged claims).
Safety of securities held in custody by Swiss banks
The Swiss system stipulates different terms for assets on bank accounts for transactions in securities, i.e. protection of stocks and bonds held in custody by a Swiss custodian bank.
Securities are a class of assets owned by the client. They do not belong to the class of bank account balances. The bank only takes these assets for safekeeping. In the event of bankruptcy of the banking institution, the securities will remain your property but will get transferred to another Swiss custodian bank.
Shares in investment funds are also a specific asset type. Like other securities, they are not considered assets of the bank. But there is one very important nuance. Funds that are part of structured products, such as swaps, can be lost when the bank fails.
To avoid the loss of personal and corporate assets, we recommend that before you place funds in bank accounts in Switzerland you should design a strategy with consideration of the Swiss depositor protection system. This strategy will require expert knowledge of the details, and you are welcome to refer to us for a consultation and professional services.
Private banks’ policies in Switzerland
Swiss banks occasionally offer negative interest rates. Some time ago, to set up bank accounts with a private bank, a potential client was to deposit a minimum of 1 million Swiss francs. However, over recent years, some banks have reduced the minimum amount requirements to CHF 250,000.
Besides, in addition to the initial deposit, Swiss banks set limits and fees for withdrawal. For early withdrawal of the deposit, they often stipulate penalties. The annual limit on cash withdrawals is considered a standard requirement established by Swiss bankers. Temporary suspension periods during which you can not access your money is also a norm and, depending on the amount of money invested, can range from six months to three years. This is part of the private banks’ policies helping your capital grow.
The tariff policy of banks in Switzerland, as a rule, is designed for several categories of clients: private, medium, influence. And if you know or engage experts with the knowledge of certain nuances and requirements set for non-resident clients, you can open an account with a Swiss bank remotely, without having to visit the bank. Besides, you are very likely to get the best rates.
Who needs to set up bank accounts subject to depositor protection in Switzerland?
Swiss bank accounts are not only for the wealthiest clients, high-ranking rich celebrities and politicians, and their associates. Those who think otherwise are just unaware of the real utility and availability of Swiss accounts for other categories of potential customers, including non-resident private individuals and legal entities.
Let us have a look at the list of persons who would benefit from setting up a bank account in Switzerland:
owners of SMEs and major corporations
Private individuals who wish to diversify their assets
persons with inherited wealth.
Switzerland is one of the top 5 countries with the largest foreign currency reserve after China, Japan, Saudi Arabia, and Russia.
Stability, prudence, innovation, confidentiality, and banking secrecy are the pillars of the country’s impeccable global reputation. That is why Switzerland is an appealing destination for investors of solid private capital from all over the world.
InternationWealth experts are ready to offer help at all stages of your Swiss bank account set-up, including a very special service: a pre-approval revision of the required documents.
Please write to our e-address given above, or click on the link given below and fill in the form, to get access to our experts’ advice and services.
Switzerland: the country of privacy, safety, banking traditions, innovations, and high-tech
Switzerland is a federal republic consisting of 26 cantons. The capital is Bern. This country is located in Western Europe, between France, Germany, Italy, and Liechtenstein. It is part of the Schengen zone but is not a member of the European Union and the European Economic Area.
Despite the lack of raw materials and fossil fuels, the Swiss economy is one of the most prosperous states in the world.
In 2020 it was as usual recognized as one of the most successful countries:
- 2nd by GDP (nominal per capita)
- 5th by PPP
- 3rd in the Global Competitiveness Report ranking.
- According to the ‘Global Innovation Index 2020’, it is second to none in the high-income group of countries with the most innovative economies (ahead of Sweden and the USA).
- It was also recognized last year by ‘The European innovation scoreboard 2020’ as the most innovative European country and the world’s innovation and tech hub.
Most jobs are in the service sector. Experts recognize the growing appeal and importance of jobs in the Swiss financial sector and the excellent Swiss education system.
If you need to set up bank accounts in Switzerland, you are welcome to book a free consultation from our experts, browse articles published on this largest international asset protection and diversification portal, request our services.
Why do depositors choose Switzerland?
The Swiss banking system is recognized as the most reliable and stress-resistant in the world. Its status is confirmed by the highest credit ratings AAA awarded by all reputable international rating agencies. Banks are very scrupulous in the KYC, verification, due diligence procedures when considering applications, especially filed by non-residents. On the one hand, this is how they minimize their risks. On the other hand, when they know their clients well they can better protect clients’ assets and interests. The Swiss self-regulated system of depositor protection safeguards the depositors’ assets and secures the banks’ sustainability. There are many intricacies to be aware of, but it is one of the most reliable depositors protection systems. It has been very rarely used because the chance of any Swiss bank going bankrupt is negligible.
How much does it take to set up bank accounts in Switzerland?
The cost of opening Swiss bank accounts depends on the tariffs of the chosen bank, the account type, the purpose of its use, some other details. There are several tariff plans: fixed, interest-based, VIP-tariff. To find out more about the current rates at banks in Switzerland, please contact us at the e-address given above this article. The consultation is free. Our fee-based expert services cover facilitation in the most important aspects of choosing the bank, the type of accounts, in compiling and filing of the application documents, including the pre-approval revision of the entire portfolio. With consideration of the economy and value of your time, compliance efforts, and the outcome of the application, our expert services are a cost-effective investment.
How much time does it take to set up bank accounts in Switzerland?
The speed of opening a bank account abroad depends on how this account will be opened – independently or with the help of experts. If applicants venture to apply for a non-resident bank account on their own, the process can take from 2 to 6 months or even longer – because of quite likely uncertainties and errors in the application documents. Mistakes (in the way documents are issues, translated, notarized, or certified), inaccuracies, and misconceptions do occur, unfortunately, quite frequently. They are often a reason for the refusal. Professional legal facilitation in the preparation of documents, their pre-approval revision, and other practicalities will substantially simplify, expedite, and justify your efforts. Depending on your profile and circumstances you can have your bank account set up in Switzerland within 1-10 business banking days if you engage our experts’ services.