Brenna Hughes Neghaiwi and Oliver Hirt

ZURICH, (Reuters) – Switzerland’s secretive banking system holds up to $213billion of Russian wealth. The country’s financial sector association estimated that this is because sanctions against Russia offer a rare view inside Swiss vaults.

The Swiss Bankers Association (SBA), estimated that banks held between 150 billion to 200 billion Swiss francs ($213billion) in Russian client money in offshore accounts.

This shows that Russians are more involved in business than many financial companies have admitted to.

This is a rare revelation for Switzerland which has previously stonewalled many transparency requests. It also comes after it made the extraordinary step of applying sanctions by the European Union to Russian cash in response to Moscow’s invasion last month.

The role of Switzerland is being debated in Switzerland, and Mattea Meyer (co-president) has called for Switzerland’s tightening on cash belonging to Russians who are close to Vladimir Putin and his government.

“Part belongs the Kremlin loyal oligarchs. She said that the money they make and the activity of their members “help finance war”.

This estimate by the SBA dwarfs the initial indicators of Russia’s credit exposure and shows the enormity of the task to impose sanctions such as cash freezing.

According to the Swiss economy ministry, there are no estimates for Russian assets that have been frozen. It is tally reports from Swiss banks subject to growing Swiss sanctions.

Although the Russian tally was estimated, the SBA said that it was very small in relation to total assets in Switzerland. Switzerland is a place where generations of rich people have regarded as safe havens for their wealth.

It stated that the Russian client share likely represents a small percentage of total cross-border assets deposited at Swiss banks. This refers to funds held abroad for foreign clients.

RUSSIAN RISK

Western countries are imposing more sanctions to Russia to curb its invasion. Banks will be scrutinizing their relationships with Russian clients, not just the Russian loans or Russian business. This could result in balance sheet loss.

Based on the information available, analysts believe that direct exposures of Swiss banks to Russian clients are manageable.

Last week, Switzerland’s largest banks detailed “limited” exposures towards Russia. UBS said that the bank with the highest exposure reported $634 Million in direct exposure.

Credit Suisse (SIX) On Tuesday, Thomas Gottstein, Chief Executive of Switzerland’s Second-Biggest Bank for Wealthy Clients stated that 4% of assets Switzerland manages are owned by Russians. This amounts to several tens billions of dollars.

This is far more than the Credit Suisse annual report’s 848 million Swiss Franc net credit exposure.

The bank does not have an up-to-date tally but it did manage 827 billion Swiss Francs in wealth management business at the end of 2021. So 4% in Russian assets would equal 33 billion Swiss Francs.

UBS, Julius Baer in Switzerland, the third-largest lender listed, declined to disclose assets held for Russian customers. However, Ralph Hamers from UBS stated that sanctions kept Switzerland’s largest bank busy.

“New lists are released every night,” said he, noting that UBS was seeking to safeguard against compliance and future penalties.

($1 = 0.9395 Swiss francs)