Credit Suisse CEO urges end of cantonal banks’ privileges

Swistzerland‘s state-backed regional banks’ privileges should be scrapped so they pay the same taxes as private banks, Credit Suisse CSGN.S Chief Executive Thomas Gottstein has said.

“I consider cantonal banks with implicit or explicit state guarantees and tax privileges a major market distortion in the Swiss private sector,” he told weekly Schweiz am Wochenende in an interview published on Saturday.

Cantonal bank are retail banks in which regional governments hold significant stakes and shareholder voting rights. Liabilities of the majority of the cantonal banks are guaranteed by the owning canton.

“A normal bank pays on average about 20% taxes and pays out 50% of profits to its shareholders. I do not see any reason why cantonal banks should not do the same,” Gottstein added.

Credit Suisse has approved around 3.3 billion Swiss francs ($3.6 billion) for coronavirus-related emergency lending so far, he also told the paper. He confirmed the lender’s plan to pay out the second dividend tranche for 2019 in autumn.

Gottstein said he had observed that family offices and wealthy private clients have started moving to Switzerland out of fear that other European countries could increase taxes including on wealth and inheritance to deal with the pandemic.

“This is a chance for our financial market and the private banking,” he said.

There were currently no plans to re-enter the U.S. wealth management market but that was something to look at in the medium and long term, the CEO added.

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