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Relationship building: the significant role of Switzerland and the UK in the financial sector
Switzerland and the United Kingdom share positive characteristics that will bond them in future collaborations - a deep sense of independence; liberal economic systems; open markets and an outward-looking vision on the world, a key conference on collaboration in the financial sector between the two countries has heard.
Our Senior Managing Partner, Patrick Odier said at a recent British Swiss Chamber of Commerce event that while both countries sit outside of the European Union, they are active players in multinational organisations.
His comments came during ‘The future of British-Swiss financial sector collaboration’ conference, which looked at the potential for the two countries following the signing of the joint statement by UK Chancellor Rishi Sunak and Swiss Federal Councillor Ueli Maurer in 2020 on deepening relations in the financial sector.
The statement sets out the aim of liberalising and expanding mutual market access in banking, asset management, insurance and market infrastructure. Work has now begun on an agreement to achieve these aims.
Ambassador Stéphane Flückiger, Switzerland’s Deputy State Secretary for International Trade, said the two countries had been working closely together to ensure that there was a seamless continuation of financial services after the UK left the EU. The “Mind the Gap’ Strategy was used to ensure the continuation of existing rights and obligations but also to seek new opportunities. Tom Gordon, Crédit Suisse, told the audience that a new agreement would not necessarily have to have equivalence but rather a mutual recognition agreement. Simon Jowers of UBS said both countries were committed to a strong agreement but measures had to be taken by both sides.
Mr Odier explained that Switzerland and the UK are the largest financial centres in Europe and share a forward-looking vision of the world in terms of innovation, trade and foreign policy. An agreement would mean better services for Lombard Odier clients; improved IT compliance laws; a reduction in costs for the bank which could be passed on to clients and the ability to collaborate on issues such as artificial intelligence and technology in the financial sector.
“The agreement would lower the cost of our services because we would be able to easily operate between UK and Switzerland. Lombard Odier already started in that direction by opening our London offices in 1973,” he said.
“This agreement should include recognition of each other’s regulations, regulators and supervisory regimes. It should cover 21st century policy issues, and themes such as digitalisation and sustainability. I believe it could be a building block for stronger cooperation and coordination in international regulation – a template for the future trade and investment landscape. This is a key plank of both UK and Swiss policy: using our influence in multinational organisations to achieve closer cooperation worldwide, and a global convergence in standards.”
A bilateral agreement would also be an opportunity to expand the lead of Switzerland and the UK in sustainable finance, research and education, said Mr Odier. Lombard Odier has an established research partnership on sustainable finance with Oxford University. The bank focuses on opportunities across all sectors, which have been created by the urgent need to transition to net zero and protect and harness the value of our natural capital. In the past, countries have collaborated together to achieve a common goal in advancing the space race. Mr Odier said that this same spirit of common purpose needs to be focused on by countries in tackling climate change.
“Our firm conviction is that sustainable investing is the only way to generate solid, long-term returns for our clients. We believe our economy is already transitioning to a model that is Circular, Lean, Inclusive and Clean (CLIC®). In the wake of the pandemic, this conviction is being shared more widely. We have seen a sharp rise in client demand for sustainable investment strategies,” he said.
“Last year, our UK-based asset management arm Lombard Odier Investment Managers launched three equity strategies with a strong sustainability focus: Climate Transition, Natural Capital and Fintech. Our Natural Capital strategy was inspired by HM The King and launched within the framework of his Sustainable Markets Initiative – another multinational collaboration. In January, we became a founding member of HRH’s Natural Capital Investment Alliance, together with HSBC Pollination Climate Asset Management and Mirova, with the aim of bringing USD 10 billion of investment from across the investment community to Natural Capital interests in a range of asset classes by 2022.
“I believe these advances neatly illustrate the idea of “co-opetition” – a phrase coined in the 1990s and revisited in a recent article in the Harvard Business Review. It is the idea that competitors should sometimes cooperate for mutual benefit – especially on large and complex projects – such as the Space Race in the last century, and tackling climate change in our own time.”
Ambassador Flückiger said the joint statement, last year, shows the intent of both countries to collaborate in the future. The willingness to defer to each other’s supervisory practices shows a level of trust in each others’ systems, he said.
An agreement could set an example for the rest of the world, said Antony Manchester, BlackRock, and offer a huge opportunity to the funds sector.
The audience at the event heard that when drafting regulations between the two countries, the people who will be affected by the new rules and have to work under them should have access to the discussions. Mr Odier said this would equate to a “bottom up” influence in decision-making and discussions.
“UK banks are also pushing politicians to develop an ambitious strategy to boost financial sector exports, via the trade body UK Finance. Recently they have advocated using “regulatory diplomacy”: encouraging UK regulators to work with counterparts in other countries to improve market access, achieve global convergence in financial standards, and cooperate in fields such as cybersecurity, Artificial Intelligence and FinTech. From a private banker’s perspective, Switzerland would be an obvious place to start such conversations,” he concluded.
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
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