Through the first half of the year, Credit Suisse maintained its leadership position in Switzerland's investment banking market, capturing 14.2 percent of the banking fee pool, or «wallet», maintaining its lead over its closest rival UBS with 9.7 percent, according to figures provided by Credit Suisse at a media roundtable on Friday.

Like other areas of the finance world including wealth management, investment banking was impacted by geopolitical events and a difficult macroeconomic environment. Last year investment banks doing business in Switzerland raked in 996 million Swiss francs in fees, while in the first half of the year, the figure stood at 365 million francs. Credit Suisse said that while the wallet had initially fully recovered from the impact from Covid, it has since fallen slightly below 2019 levels.

US Investment Banks

Jens Haas, head of investment banking for Switzerland said that US investment banks are certainly deploying resources in Switzerland, but that there is still a «big gap» with Credit Suisse, and noted that the American firms tend to focus on the top-end of the market.

In looking at the competition from across the Atlantic, Goldman Sachs bagged 8.9 percent of the wallet, followed by JP Morgan at 7. percent and Citi at 6.2 percent, according to the presentation. 

Haas also addressed the challenges facing the sector which include inflation, rising interest rates, and geopolitical uncertainty. He went on to say that supply chain disruptions, while still evident should get better and it appears that most clients have managed to live with the situation. But the biggest issue for Haas is the increase in energy prices which could lead to some «pretty tectonic shifts» in the Swiss economy.

Withholding Tax Reform 

Dominique Kunz, the head of debt capital markets talked about the recent debate in Switzerland surrounding a withholding tax on domestic bonds, where those issued by borrowers domiciled in Switzerland are subject to a 35 percent withholding tax on coupon payments. The issue comes up for a vote on September 25.

Kunz points out that domestic issuers of bonds pay a premium of 5 to 15 basis points a «very significant spread» than their peers in other markets. Abolishing the tax would allow large domestic issuers, cantons, and public sector entities to expand their investor base to all institutional investors globally.

What this means for SMEs without treasury operations outside of Switzerland is that they can borrow at the lowest available rate in any market. SMEs are often referred to as the backbone of the Swiss economy, with over 99 percent of all Swiss companies having fewer than 250 employees, according to government data, accounting for two-thirds of employment.

For larger firms, the reform means that bonds that they issue could be listed on the local SIX exchange rather than in Luxembourg. In a guest commentary for finews.com from the Swiss Bankers Association President Marcel Rohner wrote the tax is a major disadvantage for Switzerland, particularly in the area of «green bonds».

Green Bonds

With reform, Rohner said that the green bonds used to finance sustainable projects could be issued much more cheaply and increasingly in Switzerland.

He points out that 1,300 such bonds with a value of nearly 700 billion euros have been issued in Luxembourg compared to Switzerland, with around 75 green bonds worth a total of 24 billion francs being issued. 

Credit Suisse said that the ESG and green bond segment has «grown considerably» since the first issue hit the market in 2014 and ESG ratings have become a critical part of Swiss investors' credit assessments. In 2014 a total of 400 million Swiss franc-denominated green bonds were issued, rising to 5.1 billion last year, giving Credit Suisse a market share of around 14 percent. Through the end of August of this year, issuance stood at 4 billion francs. 

Strategic Review

Credit Suisse announced a strategic review of its operations in conjunction with the release of its second-quarter results. Since then there has been much speculation in the media about the fate of the investment bank, including downsizing, job cuts, or spinning it off. At the time, Credit Suisse said it will provide no further updates or comments until the release of its third-quarter results. 

Asked if the weakening of Credit Suisse's balance sheet had an impact on his side of the business Haas replied that as an intermediary business «the answer is no».