As Robert De Niro said in a now famous ad about Switzerland; “There’s no drama, no drama at all!”. Although somewhat of an overstatement, Switzerland does continue to stand out for its political and financial stability, its infrastructure and its investor-friendly regulations. These all contribute to making the country a global banking leader and an unavoidable destination for asset managers looking for investors. Colin Vidal writes

In the context of 2024, the Swiss fund market continues to grow with assets under management increasing to over CHF1.5trn, an increase of over CHF130bn since January, with both equites and money markets seeing growth in the same timeframe. We see growing demand for funds from local players and increased interest from foreign managers who are attracted to the Swiss investor landscape.

Not resting on its laurels

Rather than react and endure the changing regulatory landscape just beyond its borders, Switzerland has sought to shape it in a bid to solidify its standing and increase investor confidence. Thus, was born a landmark agreement between Switzerland and the UK, home to Europe’s financial capital: London. The agreement is unique as it emphasises mutual recognition of each country's financial regulations rather than harmonisation, a model espoused by the EU.

The Berne Financial Services Agreement (a.k.a., the Mutual Recognition Act or “MRA”), signed on December 21, 2023 aims to enhance the cross-border market access of certain wholesale financial services between the UK and Switzerland. This agreement is significant as it mutually recognises the equivalence of the two countries' legal and supervisory frameworks across several financial sectors, including banking, investment services, insurance, asset management, and financial market infrastructures. Crucially, the agreement will allow British firms and wealthy individuals from the financial services sectors — including banking and asset management — to operate in Switzerland while still following the U.K.’s regulatory rulebook and vice versa.

Implications

Although the UK and Switzerland are positioning themselves as key financial hubs outside the EU, there has been a muted response from the bloc. Current indications show that the EU has likely come to accept the unique roles both London and Switzerland have in the global financial landscape and are unlikely to react with any meaningful response. Indeed, while Brexit led to some initial relocations of financial professionals from London to EU cities like Frankfurt and Paris, many have since returned, reaffirming London's enduring appeal as a global financial centre.