Swiss private banks deny cross-border workers23 May 2019
Private banks in Geneva apparently have a secret rule that their employees shouldn’t be cross-border workers: living in France and working in Switzerland. Even though in the city there are more than 80,000 cross-border workers, the Genevan private banks discourage employees to follow this path. What’s the issue?
Cross-border workers are not welcome
Private banks based in Switzerland, especially from Geneva, are not keen to employ people living in France. Cross-border workers are very common thing in Switzerland, with 80,000 commuting every day from other countries to Geneva itself. Geneva is a small territory surrounded by French workforce and a place, where many banks have their headquarters. But companies like Banque Pictet & Cie SA, Union Bancaire Privee and Lombard Odier follow the unwritten rule that they don’t hire cross-border workers. Other firms, like UBP that doesn’t deny employees right to live across the border or HSBC that doesn’t have any policy on employees’ place of residents, still claim they prefer employees to live in Switzerland, especially when they are top senior managers. Yves Mirabaud, the chairman of the Association of Swiss Private Banks, stated in an interview that indeed bankers prefer local residents due to security reasons.
The little-known rule
When the rule to hire local-based rather than cross-border workers was applied in private banks, is not known. Mirabaud claims it is more an internal policy than a rule and apparently become the thing after job markets were opened across Europe. Though there are voices stating that this policy became common among banks after a data breach in the Swiss unit of HSBC unit ten years ago. On the other hand, Luc Thevenoz, the director of the University of Geneva’s Center for Banking and Finance Law, thinks it is a tradition that has roots going way back and connected to the famous Swiss banking secrecy. Sebastian Mena from Cass Business School in London seems to agree by stating the policy is connected to Swiss love for secrecy and famous banking culture.
The main reason to bar employees from living across the board is the care for security. Though it may seem private banks are concerned about local economy that record losses if employees earn money in Switzerland but spend mostly where they live – in France in this case, but banks care more about the potential threats to data security. Banks want to keep data under Swiss jurisdiction without it travelling in laptops or phones across the border. Everyday commuting trips of cross-border workers may expose sensitive data to breaches and also becoming interesting for French tax authorities. Even though there are no longer Swiss secret bank accounts after a decade ago tax evasion matter became a thing in relations between Europe and USA, still cross-border workers were in the center of interest when court in Paris ordered UBS Group AG to pay a record fine of CHF 5 billion for aiding tax evasions practices among clients. Previously, also HSBC agreed to pay EUR 300 million to settle the French criminal investigation on tax evasion’s allegations
Cheaper living costs in France
Employees are eager to earn money in Switzerland but live in France, as cost are lower across the border. In Geneva apartments are typically sold for around CHF 12,800 or square meter, while in France the cost is around CHF 4,500. But for banks that doesn’t matter much – they prefer employees to work, live, pay taxes in Switzerland, so all the money stays in the same country and data is not exposed to security risks. Privacy and security are still the focus of Swiss private banking sector.
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