Record assets, regulatory worries: Switzerland’s banks face a strategic test

More than CHF 10 trillion now sits in client portfolios at Swiss banks, a record that gives the country’s financial centre fresh evidence of resilience after the collapse of Credit Suisse. Assets under management rose 4.8% to CHF 9.7 trillion in 2025 and have continued climbing in 2026, according to the Swiss Bankers Association. The rise reflects stronger equity markets and higher securities portfolios held by both Swiss and foreign clients.

The milestone arrives as banks operate through zero interest rates, compressed lending margins and an unsettled geopolitical environment. Those pressures have not stopped wealth management from expanding. Foreign clients continue to value Switzerland’s reputation for stability and security, while geopolitical tensions are accelerating the movement of wealth, according to Giorgio Pradelli, chief executive of EFG International.

The sector’s financial results reinforce the picture. Operating profit rose 5.8% to CHF 73.8 billion in 2025. Commission and service income increased 6.5%, offsetting a 0.8% decline in net interest income. Switzerland’s banks have found growth where balance sheet lending offers less support: advisory, portfolio management and other services tied to client assets.

Commission income has become the sector’s main growth engine as interest margins remain under pressure. The Swiss Bankers Association expects wealth management to keep expanding in 2026, even as zero interest rates limit the contribution from deposits and lending. More than half of the institutions surveyed expect operating profit to increase this year, while one third expect stagnation and none forecast a decline.

The revenue mix matters for the industry’s future. Seventy three percent of banks expect commission and service income to rise. That points to continued investment in client advice, investment products and cross border wealth management rather than reliance on traditional interest spreads. The model also places greater weight on market performance. When equity markets hold up, securities portfolios grow and banks collect more fees. A sustained market reversal would test that dependence.

The employment figures show the adjustment underway. Banks in Switzerland employed around 92,002 people at the end of 2025, down 2.5% from a year earlier. The decline came solely from the UBS and Credit Suisse merger. Other banks increased their workforces, and EFG hired 140 relationship managers during the disruption that followed Credit Suisse’s demise, twice its normal annual target.

Bern is preparing the largest overhaul of Swiss banking rules since the global financial crisis. The package responds directly to the failure of Credit Suisse and reaches beyond UBS, Switzerland’s largest bank after its state sponsored takeover of its former rival in 2023.

The proposed reforms would make senior bankers more directly accountable for failures under their watch. They would also tighten bonus and clawback provisions, give the Financial Market Supervisory Authority, FINMA, stronger enforcement powers, and improve crisis planning. Banks would gain clearer arrangements for access to central bank liquidity during periods of stress.

The most contentious measure concerns UBS. Parliamentary deliberations include a plan that could require the bank to hold about $20 billion, or CHF 16.2 billion, in additional common equity. Swiss Finance Minister Karin Keller Sutter has maintained that full capital coverage of UBS’s foreign subsidiaries is necessary. The upper house’s economic affairs committee is weighing alternatives that could soften the government’s proposal.

Supporters argue that stronger buffers would reduce the risk of another rescue involving the Swiss state and taxpayers. Bank executives accept the need for stability, yet warn that rules must reflect the different risk profiles and business models of Switzerland’s banks.

Giorgio Pradelli says Switzerland cannot assume that its financial prominence will last. The EFG International chief executive, who becomes chair of the Swiss Bankers Association next month, has made competitiveness the sharpest point in the debate over the post Credit Suisse reforms.

Pradelli told the Financial Times that Switzerland’s regulatory framework must be proportionate. He pointed to a wider shift among competing financial centres, where the United States is simplifying some capital requirements, the United Kingdom has delayed parts of its Basel reforms, and policymakers in both markets are limiting potential increases in overall capital demands. Hong Kong overtook Switzerland in 2025 as the world’s largest offshore wealth hub, according to Boston Consulting Group.

EFG’s performance illustrates the opportunity still available in Switzerland. The private bank attracted CHF 5.7 billion in net new assets during the first half of 2026, recorded positive inflows for 15 consecutive half years and saw its shares rise by nearly 100% since UBS took over Credit Suisse. Its gains came as clients and relationship managers moved during a period Pradelli described as pivotal.

For smaller and mid sized banks, the regulatory cost of operating in Switzerland could affect hiring, product design and the willingness of international teams to remain in the country.

Switzerland’s banking test now combines resilience with regulatory precision. The record asset total gives Bern room to protect a sector that remains a major employer and source of high value services. It also raises the cost of policy mistakes. Wealth management clients can move portfolios, and relationship managers can change employers, more quickly than a regulatory process can be redesigned.

The immediate outlook remains positive. Sixty percent of banks expect staff numbers to remain stable in 2026, while one third anticipate an increase. The Swiss Bankers Association also forecasts further sector growth despite geopolitical uncertainty and zero interest rates. That confidence rests on Switzerland’s established strengths: political stability, specialist expertise and the trust attached to its financial institutions.

The Credit Suisse collapse has changed the political threshold for risk. Basel, Zurich and Bern now face pressure to ensure that a bank of UBS’s scale can withstand a crisis without extraordinary public support. At the same time, regulators must avoid imposing the same burden on institutions that do not pose the same systemic threat.

Pradelli’s assessment captures the balancing act: Switzerland is getting closer to the right mix of stability and proportionality, but competitiveness still needs improvement. The next decisions on UBS capital, FINMA powers and accountability will show how Bern intends to protect both sides of that equation.