Swiss banks hold more than US$200b in stashed Russian cash

Bern

SWISS banks may hold more than US$200 billion of Russian wealth, the country's banking lobby estimates, as sanctions shine a spotlight on the extent of Russian wealth stored in overseas vaults.

Banks probably hold between 150 billion (S$217.4 billion) and 200 billion Swiss francs of Russian client money in offshore accounts, according to the Swiss Bankers Association.

Credit Suisse Group chief executive officer Thomas Gottstein said earlier this week that Russian money accounted for about 4 per cent of assets at the bank's wealth management division.

The country of 8.6 million inhabitants has long been attractive for wealthy Russians, lured by the discretion and light-touch regulation it offers.

While data from the Basel-based Bank for International Settlements show Russian residents and companies held US$11 billion in Swiss bank accounts as of September, more than double the roughly US$5 billion in the UK, that number figure grossly understates the extent of Russian wealth in the country, because it doesn't include brokerage accounts, investments or assets held through offshore companies.

Private bankers at the country's biggest wealth managers, who requested anonymity to discuss internal information, earlier this month estimated that rich Russians have in excess of US$100 billion stashed away across the country's lenders, with one person putting the figure at US$300 billion - equal to almost 40 per cent of the Swiss economy.

Wealthy Russians with links to President Vladimir Putin have seen their assets frozen across the world, while other rich bank clients who borrowed against Russian assets have to come up with more collateral after those securities plunged in value.

Bloomberg reported previously that UBS Group and Credit Suisse are both triggering margin calls on some customers who use Russian bonds as collateral, after marking down the value of debt issued by the country and its corporations.

The Swiss government broke with a long-entrenched tradition of neutrality and agreed to enforce European Union sanctions against Russian companies and individuals including Putin and Foreign Minister Sergei Lavrov late last month. The government's decision to implement the sanctions came after a weekend in which it was criticised by opposition politicians, editorials in leading Swiss papers as well as by other governments.

In contrast to the UK's more aggressive approach, Switzerland however is so far relying on banks or other holders of sanctioned Russian assets to report these to the government. It's not clear yet how much cash held by Swiss banks has been frozen to date. BLOOMBERG