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Geneva banks, stung by tax evasion crackdown, see rosier 2018

Geneva banks, stung by tax evasion crackdown, see rosier 2018

By Reuters Staff

GENEVA (Reuters) - Geneva’s financial sector is turning more positive after its fears about 2017 turned out to be overdone, an annual survey by the Swiss city’s banking association showed on Tuesday. 

Half of Geneva’s big banks - those with over 200 employees - expect net profits to rise in 2018, the Geneva Financial Center said. And although 18 percent see profits falling by up to 7 percent, the same number expect growth of 15 percent or more. One in four foresaw little change.

That marks a turnaround from the same survey last year, when 8 percent of Geneva’s big banks, which include Pictet Group and Lombard Odier, anticipated a profit slump of at least 15 percent in 2017, and none foresaw profit growing by more than 7 percent.

After the global financial crisis, Switzerland faced allegations of complicity in tax evasion and avoidance that risked turning the country into an international pariah and tarnished its renowned banking sector.

The fallout culled Geneva’s banks - there are now 104, 25 percent fewer than in 2011 - and the sector has pushed for regulatory reforms to ensure it can compete internationally, along with the rest of Switzerland, which is perennially ranked the world’s most competitive economy.

“Competitiveness, talent and innovation are what keep the Geneva financial sector’s heart beating,” Yves Mirabaud, president of the Geneva Financial Center, told a news conference. 

“It makes sense to reinforce them with the best policy framework possible,” said Mirabaud, who is also senior managing partner at Mirabaud, a Geneva-based private bank.

To stay competitive, the financial sector needs access to the European Union market, a tailored regulatory regime in line with international standards, and attractive rules with a high degree of predictability and legal certainty, he said. 

New financial regulations will come into force by 2019, after a “chaotic start” in 2015, Mirabaud said, while the outline of a new corporate tax law is expected later this year, after Swiss voters rejected a previous plan in February.

Many questions also needed resolving with the EU, although the survey showed Luxembourg had increased its popularity as the best potential alternative to Geneva, with London’s appeal almost wiped out amid uncertainty over Brexit.

Asked about the outlook for 2018, 45 percent of big banks said it would be “good”, with the rest split between “difficult” and “stable”. A year ago, only 8 percent were positive about the outlook, with 42 percent anticipating a “difficult” 2017.

Those fears broadly failed to materialize, with 46 percent now calling 2017 “good” and 9 percent “very good”. 

Reporting by Tom Miles; Editing by Mark Potter

Our Standards: The Thomson Reuters Trust Principles.


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