Development of Zurich's Financial Center
At the start of the 21st century, Zurich is numbered among the handful of leading financial centers in the world. The following brief outline of the history of the Zurich Financial Center aims to examine how the financial center was able to develop to its present stature.
A detailed presentation is given in the article by Dr.phil.Robert U. Vogler, "The Zurich Financial Center – A Success Story".
History of the Zurich Financial Center
The foundation stone for Zurich's banking center was laid in 1755 when Bank Leu & Co. was established. However, the center's real history only dates back to 1856, when a second major bank was founded: this was Schweizerische Kreditanstalt (now Credit Suisse). As industrialization gathered pace, Zurich developed into the leading center of industry in Switzerland. This increased the city's attractiveness as a location; together with the presence of the major banks that were already established there, this drew more banks to Zurich, including Eidgenössische Bank (EIBA), set up in Berne in 1863, which transferred its headquarters to Zurich in 1892. Bank in Winterthur (established in 1862) became Schweizerische Bankgesellschaft (SBG) in 1912 and also moved its headquarters to Zurich; these two banks, together with Bank Leu and Credit Suisse, made up Zurich's quartet of big banks which by 1908 accounted for 50% of the balance-sheet total of the seven largest Swiss banks.
Statue of Alfred Escher; The monument in front of Zurich's main station shows that his life's work, which paved the way for a modern Switzerland, has been successfully completed.
After the Swiss Federal State was set up in 1848, Zurich began to take on the leading role in the country's economy. The need to finance the construction of railway lines created a requirement for additional capital. In order to pre-empt the foreign banks, Alfred Escher and his business partners founded Schweizerische Kreditanstalt, which in turn was involved in establishing Schweizerische Rückversicherung (Swiss Re) and Zurich Versicherung (Zurich Insurance). Shortly after his death, Escher became one of the few statesmen to be honored by a statue in front of Zurich's main rail station.
Old Stock Exchange 1930 (left) and Nationalbank 1922 (right) in Zurich
In 1880, the construction of the splendid Bahnhofstrasse and the stock exchange - regarded as a very impressive building at the time - literally laid the foundations for a prestigious financial center. Zurich's pre-eminent position was consolidated even further in 1905 by the decision to make the city one of the main locations of the Swiss National Bank (SNB), together with Berne.
It was now if not before that the Swiss or Zurich Financial Center truly came into being, comprising a group of powerful major banks, a central bank, an integrated capital market and a range of intensive capital export activities. The importance of the banks and the other financial service providers in Switzerland continued to grow over the following decades. However, it was not until after the second world war that Zurich developed into one of the leading international financial centers.
The new main station, conceptionalized by the architect Jakob Friedrich Wanner (1971)
By the end of the 19th century, 625 banks and finance companies had set up business in Switzerland, with more than 4300 mainly domestic branches. The banks were divided into several categories: cantonal banks, major banks, regional banks and savings banks, Raiffeisen banks, private bankers and other banks. There were also 126 foreign banks. Since a large number of these establishments were concentrated in Zurich, the city's financial center continued to grow in importance as the 20th century went on.
_2.jpg "Paradeplatz (1864)")
Paradeplatz (1864)
Zurich's prominence as a banking center was not even jeopardized by the transformation of the Swiss banking sector which was initiated in the 1990s and has continued until today. By 2008, only 332 banks remained in Switzerland following numerous acquisitions, mergers, and liquidations; almost one third of them are located in Zurich. These include the major banks, now reduced to two in number: Credit Suisse and UBS, formerly SBG. In 2003, Zurich's share of the total assets for all Swiss banks was over 65%.
Zurich Becomes a Leading Financial Center
Zurich's rise to become one of the world's leading financial centers is due to the asset management sector; Switzerland had already established its position in this sector at the start of the 20th century and went on to consolidate it after the second world war. This success is often attributed to bank client confidentiality and the fact that Switzerland was not directly affected by any acts of war, but these were not the true reasons. In fact, the decisive influencing factors were the stable banking system and favorable overall conditions, political and economic stability, legal certainty, the availability of a highly qualified workforce, attractive tax conditions and a stable currency that has always been convertible.
Glance at Counter area of “Schweizerischen Kreditanstalt” (1856).
The Zurich Financial Center has developed into one of the world's leading financial centers not only as regards asset management but also in terms of financial infrastructure (stock exchange, payment and securities systems) and alternative investments.