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Smaller Swiss market predicted

The Swiss banking sector is expected to shrink by 2010, forcing job losses and salary cuts, according to recent research.

A study by Accenture and the Swiss Institute of Banking and Finance at the University of St Gallen, asked 180 senior managers of Swiss banks what direction banking will take over the next five years.

Rising pressure on costs created by the downturn in the past three years, together with EU regulatory changes, have had an impact on Swiss banking. Switzerland is not an EU member but there is a trend for Swiss laws to harmonize with Europe. Further harmonization is expected in accounting rules, use of insider knowledge and prevention of money laundering, suggesting Switzerland will lose its special position in Europe.

A concern is that tighter regulations and increased supervision will have a negative influence, particularly in private banking, where 77% believe this will prejudice business development. Regulatory changes will enhance competitiveness but the banks will face rising costs, putting a serious financial burden on smaller private banks.

Consolidation will continue, with 83% of respondents expecting the number of banks to fall between now and 2010 (see figure). The Swiss National Bank says there were 840 banks in Switzerland in 2002, a figure expected to drop to 730 in 2010.

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