Nevertheless, despite a clear tendency towards financial market concentration, Switzerland remains a country with a wide network of small banks. Beside the two big banks, Credit Suisse Group and UBS AG, Switzerland counts over 100 regional and savings banks, 24 cantonal banks, 17 private banks and over 140 subsidiaries and branches of foreign banks. Our banking sector is extremely dense with a strong presence in all parts of the country. The insurance sector is the second traditional leg of our financial centre. Our insurance companies have strongly expanded abroad. Here also, open markets and intense competition have led to consolidation and large units. More than 10 years of global de-regulation have left deep and lasting marks not only on the structure of the financial sector, but also on the range of its activities. Reacting to the changing market environment and stiffer international competition, many banks have placed more emphasis on their international business and shifted their activity from balance-sheet to off-balance-sheet transactions. This is true in Switzerland as well. Investment banking and asset management have gained in importance, whereas less lucrative areas, such as domestically-oriented retail banking, have lost part of their attractiveness. In our case, the expansion of the investment banking activities has taken the form of a number of acquisitions in foreign countries, tightening the ties between Switzerland and other financial centres. BIS Review 13/2002  1  The expansion of asset management has been much more domestically generated. Asset management is an area in which Switzerland has been traditionally strong.

What has been true for Nestlé, Novartis or Swatch - to name just a few - is also valid for the banks: in today’s competitive marketplace, only the fittest will survive, some of them even becoming global players in the process. b)  Professional skills  Secondly, our finance industry has access to a pool of well-educated, highly-skilled, multilingual, and service-oriented workers who are very familiar with international financial markets. Private banking has a long tradition in Switzerland, and financial advisory services to foreign clients have been a part of the Swiss banking business for generations, literally. c)  Efficient financial infrastructure  Thirdly, besides the availability of a highly professional staff, there is the outstanding efficiency of Switzerland’s financial infrastructure. I am referring here to the so-called “Swiss value chain” which comprises a full set of settlement and payment systems, with their individual parts harmonised in an optimum way. The entire facility consists of a trading platform, a payment-against-delivery system, and a central payment system. A fourth component, a central counterparty, is currently being developed. It might be due to their long tradition of watchmaking that the Swiss have developed a skill to build and interconnect sophisticated settlements systems. In 1987, the Swiss National Bank launched the Swiss Interbank Clearing (SIC), the first RTGS system and precursor of many payment systems around the globe. Shortly after, the Swiss Exchange moved from a traditional “à la criée” procedure to an electronic platform including the automatic transfer of securities.