At State Street, the company typically avoids public attention and refrains from political lobbying, preferring instead to focus on data.

Now, unintentionally in the spotlight, the institution is forced to defend its business.

Parliamentary Commission Calls for a Reversal

The controversy stems from a motion filed by the Economic Affairs and Taxation Committee (WAK) of the National Council, following an interpellation by SVP National Councilor Thomas Matter. The commission is pushing for State Street to be stripped of its mandate as custodian of the AHV Compensation Fund.

If this is not legally feasible, the commission believes the Federal Council should create the necessary legal framework to enforce the change.

The proposal is set to be debated and voted on in the National Council on March 3, 2025, the first day of the spring session.

UBS Managed the Fund Since 1997

Compenswiss, an independent public-law institution based in Geneva, is responsible for the compensation funds of AHV, IV, and EO. Its board is appointed by the Federal Council.

In the summer of 2024, the mandate transitioned from UBS, which had held the position since 1997, to the Zurich branch of State Street Bank International in Munich.

Compenswiss made the change after the Swiss Federal Audit Office recommended a tender process for global custodian and fund administration services. The decision was made before UBS completed its acquisition of former competitor Credit Suisse.

Security Concerns Raised

The majority of the National Council’s commission argues that security concerns are at the core of the issue, particularly regarding State Street’s status as an American bank.

«For reasons of safeguarding our national wealth (First Pillar), wouldn’t it be more prudent for Switzerland’s social security funds (AHV, IV, and EO) to have their global custodian services handled by a Swiss bank?» asks Thomas Matter.

State Street, however, emphasizes that it is solely responsible for the administration of the compensation fund, a process so technically complex that only a handful of banks are capable of offering it. The bank underscores its specialization in this area and its more than 200-year history.

It also rejects claims that it lacks a strong presence in Switzerland. «We are certainly not a mailbox company. We operate an office in Sihlcity with 100 employees and are regulated by FINMA,» a spokesperson stated upon inquiry.

Furthermore, the bank disputes the concerns over risks, stating, «A Swiss bank would not be in a better position in this regard.»

Why the Swiss Bankers Association Opposes the Motion

The Swiss Bankers Association (SBA) shares this view. «We are convinced that the custodian bank change does not introduce additional risks, especially since a Swiss custodian bank would also have to hold U.S. securities in the United States. The SBA stated that the effects of an unlikely but possible asset freeze by U.S. authorities would be the same for all banks, regardless of their headquarters' location.

The association opposes the motion for another reason as well: «We firmly believe that private companies must be able to rely on established procurement processes. That is our understanding of legal certainty.»

Additionally, the motion would effectively exclude all foreign banks operating in Switzerland from serving as custodians for Compenswiss. «With their expertise and valuable networks across various global markets, foreign banks are reliable partners for Swiss businesses,» the SBA argues.

This argument holds merit. After all, Compenswiss is not the only entity relying on the services of an American institution—many Swiss pension funds do as well, including Publica, the pension fund of the Swiss federal government, and the pension fund of SBB, the Swiss national railway company.