Success rooted on solid ground

Industrialisation as the trigger

Zurich is the youngest of Switzerland’s financial centres. It was established as late as the eighteenth century as a consequence of the growing significance of the textile industry and international trade in Zurich, when textile businesses started to operate as banks as well. The silk company founded by the Schulthess family in 1750 evolved into a business devoted exclusively to banking and which today is the Bank Rahn & Bodmer. The first classical bank to be established in Zurich was Bank Leu in 1755.

In the nineteenth century, Zurich grew to become Switzerland’s largest city and, as such, an economic hub and leading research centre. In 1856, Alfred Escher founded the ‘Schweizerische Kreditanstalt’ (today’s Credit Suisse) so as to meet the growing need for investment capital for the construction and operations of railway lines. The ‘Schweizerische Kreditanstalt’ was also involved in founding the ‘Schweizerische Lebensversicherungs- und Rentenanstalt‘ (today‘s Swiss Life), the ‘Schweizerische Rückversicherung‘ (today‘s Swiss Re) and ‘Zürich Versicherung’ (Zurich Insurance).

Setting the course

In 1880, the construction of the ‘Bahnhofstrasse’ and the stock exchange, then regarded as a very impressive edifice, laid the foundation for a prestigious financial centre building wise as well. Numerous other banks and insurance companies were established up until the end of that century that, over the course of time, became today’s internationally known institutions. By the turn of the century, the Swiss insurance market had developed into the second-largest in the world, surpassed only by the British insurance market. The sector established the Association of Zurich Credit Institutes in 1902 which was renamed Zurich Banking Association in 2011.

The financial centre was further consolidated in 1905 when, besides Berne, Zurich was chosen as the main seat of the Swiss National Bank.

The large Swiss companies played a leading role in the rapidly advancing globalisation of the insurance industry.

Stability in times of crises

The years between the First World War and the early 1930s were decisive for the trajectory of Swiss insurance companies. Whereas the Swiss financial centre had played a fairly significant role before that period already, the war and the ensuing turmoil increased Switzerland’s appeal as a stable location quite considerably. Though the war strongly impaired the conditions for financial transactions, the economic and social problems in Switzerland were not of the same magnitude as in countries embroiled in the war. Switzerland was better equipped to withstand the collapse in value at the stock exchanges and of payment transactions. The Swiss National Bank prevented the crisis from taking on systemic proportions.

Once wartime had been overcome, Switzerland was able to benefit from its neutrality as it allowed a presence in all European markets even during conflict times. The Swiss financial sector managed to seize new business fields which also proved stable after the war, such as foreign exchange and banknote trading. Furthermore, as of 1915, money from countries with weak currencies was increasingly deposited in Swiss francs at Swiss banks. That is what led to an unprecedented international upturn for Switzerland after the First World War.

The stock market crash in 1929 and the world economic crisis were the cause of major losses at the Zurich financial centre as well. At the same time, these events marked the beginning of a conscious Asset Management which, as of late, is being actively promoted as a growth market. A consolidation of the domestic market and a gradual expansion to foreign markets also continued during the Second World War.

Stronger growth from the 1950s onwards

Zurich’s climb to becoming one of the world’s most important financial centres began after the war. From the mid-1950s onwards, economic growth, the technology boom and the internationalisation of the financial system proved conducive to additional growth. The banks became the leaders of comprehensive Asset Management offered to affluent clients in and outside of Switzerland. The insurance companies established themselves as important exporters and know-how carriers of risk assessment and strengthened their international expansion.

The era of mergers and acquisitions began in the 1980s and 1990s, the impetus being the stock market boom and the dissolution of insurance cartels and later further reinforced by the Swiss real estate and regional bank crisis.

Present-day and future challenges

The Zurich financial centre has not remained unscathed by the stock market crash in 2001/2002 and the financial crisis in 2008/2009. However, unlike in other countries, none of the important financial institutions fell victim to the crisis, and losses of savings deposits were prevented. In the wake of the financial crisis, a host of additional regulatory measures were adopted nationally and internationally with Switzerland assuming a leading role in implementing these. Considerable international pressure called for a fundamental business model realignment in cross-border client advising.

The rapid pace of digitalisation and growing cost pressures constitute further major challenges for the financial centre. Its solid and innovative companies are equipped with the best possible prerequisites to successfully master these challenges. Preconditions for this are and continue to be favourable framework conditions, such as political and economic stability, legal certainty, availability of highly qualified manpower, moderate regulation and taxation as well as a stable currency that is always convertible.