View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Business
1 February 2013updated 22 Oct 2020 3:55pm

Switzerland shifts gold off the books in preparation for Basel III

Swiss banks move private investors to institutional accounts.

By James Ratcliff

Contrary to popular myth, there are at least a few Swiss people who won’t shy away from a fight. One of them is Nicolas Pictet, chairman of the Swiss Private Bankers Association.

The American Internal Revenue Service (IRS) has been duffing up the Swiss banking industry for quite some time now. Some of the biggest Swiss banks have had to surrender their US client list to the IRS under subpoena, and the US tax authority has been dogged in its pursuit of those US citizens they have found to be using the international banking system to avoid domestic tax requirements — even little old ladies.

Now, Pictet has decided enough is enough… it is time for the banks in question to stand up and if not hit back, at least defend themselves properly.

This week we saw another move that is likely to alter the perception of Swiss banks. UBS and Credit Suisse, two of the banks at the centre of the IRS investigations, significantly raised their charges for holding gold — making it very unattractive for private individuals to deposit the precious metal with them.

The primary reason for the decision was not to stick it to the IRS, of course. Rather it is to move gold off the banks’ balance sheets ahead of the introduction of the Basel III rules, which require them to change the ratio of capital to assets.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

The banks are encouraging clients to move their gold deposits to “allocated” accounts, which sit outside the banks’ balance sheets and generally attract far larger fees, and are primarily aimed at institutional investors.

The rise in charges on “unallocated” will undoubtedly discourage private individuals from keeping gold on deposit with Swiss banks. One gold market analyst told me the banks were now “terrified of US clients, who account for a significant proportion of their client base”.

“The Basel III requirements are providing the banks with a good excuse to get rid of their American clients,” they said.

So is it a case of Swiss banks reflecting some of the IRS’s heat onto its US clients? That would probably be to cut off their nose to spite their face, since there are plenty of other places investors can keep their precious metals.

But it will undeniably cause private investors, both in the US and elsewhere, problems. For many, there is no more solid investment than bars of gold, and nowhere more secure – or private – to keep them than a Swiss bank.

Either way, those banks are changing their rules. And with Basel III deadlines ramping up we are likely to see even more drastic changes to the private banking landscape.

Most of those changes are likely to further weaken the relationship between Swiss banking institutions and their clients. As Pictet told his compatriots: “[Switzerland] runs the risk of being dropped from the squad and finishing the race out of time, in the complete indifference of the political world.”

While shifting gold deposits off the balance sheet might help in some way to pacify the IRS, the result may well be the erosion of Switzerland’s position in the global banking world – leaving a lot of people holding out for a turnaround in the cuckoo clock market.

Content from our partners
Development finance reform: the key to climate action
Individually rare, collectively common – how do we transform the lives of people with rare diseases?
Future proofing the NHS

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU