Treasury Today Country Profiles in association with Citi

Switzerland: a strategic play for treasurers

Despite its total population being less than 50% of that of Shanghai, Switzerland is well known for its excellent banking network, easy access to the rest of Europe and availability of professional expertise. It consistently takes the top spot in quality of life and global competitiveness surveys. And more than excellence in chocolate, cheese and watch making, the country also boasts the presence of an extensive treasury community. But can Switzerland retain its lustre in the eyes of multinational companies?

Much to offer

“Switzerland is still considered a ‘competence centre’ for treasury activities and we continue to see the trend to place treasury centres here,” says Fabio Sarao, Deutsche Bank’s Head of Cash Management Corporates, Switzerland. Some high profile corporates who have relocated their treasury centres to Switzerland in recent years include Yahoo!, Tyco and ADM.

“Although we have observed a decline in the number of companies relocating to Switzerland, the general view is that the growth for international companies will continue in the coming years.” According to Sarao, the main decision to move to Switzerland is still driven by its favourable corporate tax environment. Relief on the taxation of intercompany debtors in 2010 – which has, for example, seen the easing of the 10/20 lender rule – adds further weight to the country’s attractiveness as a strategic treasury location.

For a corporate thinking about moving its treasury centre to Switzerland, Sarao suggests that some thorough homework be undertaken first. “A proper assessment of the various areas is crucial – what is important for the business and what are its strategic objectives? Fact finding exercises should be performed with support from administrative authorities. Such assessment, when combined with a highly-qualified labour market, economic competitiveness, attractive tax system, good quality of life, central location and an excellent infrastructure, should contribute to a successful and smooth integration.”

Local expansion and innovation

Given the attractive benefits the country offers, it is no surprise that multinational companies (MNCs) continue to consider Switzerland as a key treasury location. To reflect this, many of the banks are now investing more into Switzerland, so treasurers can expect even better cash management services in the country going forward.

“Deutsche Bank is focusing on this key market by putting local people on the ground and expanding its service offering. In addition to our coverage and sales people we are also filling in back/middle office functions, such as implementation and customer service units and adequate compliance and legal departments, given local expertise is increasingly becoming a core competitive element. Our main competitors are following this trend and also investing in Switzerland,” says Sarao.

Switzerland: Demand, output and prices

Aside from bank expertise, if you’re looking to hire some innovation into your treasury department, then Switzerland may just be the place to find it. The country has been named the most innovative in the world by INSEAD, the leading international business school. It also topped the EU’s 2011 Innovation Scoreboard by a large margin. This abundance of intellectual property will also help to drive the country’s economic growth, which is expected to pick up from H2 2012 onwards.

Now the only question that remains is: Geneva or Zurich?!