Economic significance

With a value added of nearly CHF 61 billion or 9.5% of gross domestic product (GDP), the financial sector was among the key business sectors in Switzerland again in 2014.

The key importance of the financial sector to Switzerland as a business location becomes even more apparent when taking into account also the direct and indirect contributions of other business sectors. This includes services provided by non-financial businesses to the financial sector as well as other indirect beneficial effects. To quote but two examples: a construction company building a bank’s offices, or a foreign private banking client who combines his visit to the bank with a holiday in Switzerland. Financial firms also promote the growth of other businesses, for instance by granting loans for building or expanding production facilities or by providing business disruption cover. Even by international comparison, the financial sector ranks high in Switzerland. Its contribution to the total value added is twice to three times larger than in any other European country except Luxembourg.

In 2015, around 210'000 people or 5.9% of the Swiss working population were employed in the overall financial sector. Almost 40% of bank employees work for big banks. Nearly three-quarters of all insurance employees work in property and casualty, followed by life and reinsurance. Productivity in the financial sector (value added divided by number of employees) is clearly superior compared to the average productivity in other important sectors. The 5.9% of the working population employed in the financial sector account for 9.5% of the overall gross economic output. In other terms, the productivity per financial sector employee is almost twice the overall average.

Banks are among the major taxpayers in Switzerland, even though there is no standard method of attributing specific tax categories to the banking sector. The tax contribution of the banking sector may be structured in these four categories:

Direct foreign investments are investments made by Swiss companies outside Switzerland with the purpose of establishing a strategic long-term relationship with the company in which they invest, and ensuring a significant influence on the company’s management. According to the OECD definition, a long-term interest is given if the direct investor holds at least 10% of voting rights in the direct investee. Direct foreign investment subsumes a variety of transactions such as opening non-independent branch offices, entering into joint ventures, establishing subsidiaries, or mergers and acquisitions. Loans to foreign subsidiaries within the group and profit retention by foreign subsidiaries are also deemed direct investments. A distinction is made between annual direct investments (periodic value) and the existing portfolio of direct investments (cumulative value). The latter represents the accumulated annual inflows and outflows, and reflects market volatility and currency fluctuations.

By international comparison, Swiss direct investment abroad is quite substantial. This is also reflected in the ratio of the cumulative Swiss direct investment abroad to the nominal GDP. Banks and insurance companies account for roughly one-quarter of these direct investments.

Vice-versa, foreign direct investments in Switzerland are equally important to the Swiss financial sector. Furthermore, a substantial number of shareholders in large Swiss financial companies are non-Swiss.