Corporate and investment banking is one of the pre-eminent areas in finance and an attractive area of employment for banking professionals. Swiss banks institutions play a crucial role in the economy; contributing to around 7.4 percent of gross value added and the direct employment of 107,388 people, of which 90,660 are employed in Switzerland, according to the European Banking Federation. Over 30% of Swiss exports are also related to pharmaceutical products, meaning that that the corporate banking sector plays a significant role in enabling these goods to get into the hands of those who desperately need them to improve or maintain their quality of life.
Alongside being a significant economic contributor by consuming good and services, the Swiss banks’ lending business remains key for the country's economic development. Switzerland also leads the world in regulation of the banking and financial sector to help prevent future financial crises, having a 'too-big-to-fail' (TBTF) provisions that go far beyond the minimum international requirements according to the International Monetary Fund.
The largest five banks in Switzerland: UBS Group AG, Credit Suisse Group AG, Julius Baer, Raiffeisen Switzerland, and Zurich Cantonal Bank have combined assets totaling more than CHF 5.7tn. They provide an essential service to the thousands of small-medium enterprises (SMEs) that make up over 99% of businesses in Switzerland, according to the State Secretariat for Economic Affairs (SECO), and account for two thirds (68%) of employment in the region. Swiss SMEs that make use of external capital primarily rely on bank financing. In general, over 90% of the companies that apply for a bank loan in 2017 receive an approval. These businesses rely on the existence of corporate and investment banks to succeed.
Despite challenges from high regulatory costs, rising competition, and continued negative interests rates of -0.75%, the Swiss banking sector is in a moderately positive shape. A report by the Swiss Bankers Association found that the aggregate operating net income of the banks in Switzerland increased by 4.6 percent year-on-year to CHF 65.3 bn; resulting in an annual profit of CHF 11.5 bn (CHF 1.7 bn higher than in the previous year).
Corporate banking is experiencing a period of growth, according to the 2019 Banking Industry Outlook released by Deloitte, global corporate lending is on an upward trajectory. ROE for Western European banks in the top 1,000 world banks grew to 8.6 percent in 2017, compared with 5.5 percent in 2016. Credit Suisse leads the pack with a market penetrate rate that amounted to approximately 79% of the Swiss corporate banking market in 2019. While UBS Group AG, which hold total assets of US$978 billion, recently announced a partnership with Banco do Brasil SA to provide investment banking services, M&A and advisory capabilities, debt and equity capital markets, a broad networks of corporates and investors, as well as institutional securities brokerage in Brazil and some of its selected neighbours.
“If I am a corporate client of Banco do Brasil, I will now have access to what UBS has in terms of its local and global capabilities,” Tom Naratil, president for UBS Americas and co-president for global wealth management, said in an interview. “If you look at our partnership, there is very little overlap of capabilities.”