Switzerland’s importance as a private banking hub will shrink after the country increased its tax transparency, according to Indian billionaire Gopichand Hinduja, one of four brothers who control the family’s Hinduja Group conglomerate.
The world’s richest people are instead turning to countries like Dubai, Qatar and Singapore to house their assets as Switzerland loses its allure as a haven, the 76-year-old London-based investor said.
“People are finding new havens,” Hinduja said in a July 22 interview at his office near Buckingham Palace. “I don’t think Switzerland can maintain its importance in banking.”
Tax probes by the U.S., France and Germany and a new system of bank-data exchange between governments have scuppered the traditional “no-questions-asked” approach by Swiss banks to serving rich clients living abroad. North American and European banks are quitting Geneva and Zurich as companies battle with the loss of financial secrecy, the strong Swiss franc and pressure on profitability from low interest rates and tougher regulatory demands.
Hinduja is one of four billionaire brothers who control Hinduja Group, a closely-held industrial conglomerate with interests in cars, finance, media and energy on five continents. Hinduja Group’s assets are owned by family members under a structure guided by the principal that "everything belongs to everyone and nothing belongs to anyone," according to the company’s website. Together, the family has a net worth of $14.4 billion, according to the Bloomberg Billionaires Index.
Srichand Hinduja, one of the brothers, is the founder and chairman of Hinduja Bank Switzerland, which manages 2.3 billion Swiss francs ($2.3 billion) of assets, according to the company’s 2015 annual report. Their younger brother, Prakash, is also a member of the board of directors, according to the report, and lists the luxury Geneva suburb of Cologny as his place of origin on the Swiss companies register.
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“GP Hinduja is neither a shareholder, nor has any direct involvement with Hinduja Bank (Switzerland) Limited, which in no way shares his view,” the bank’s attorneys at M Law LLP wrote in an Aug. 6 letter to Bloomberg. “Mr GP Hinduja was speaking in a personal capacity only, and his views do not represent those of Hinduja Bank (Switzerland) Limited.”
Banks in the country are investing in subsidiaries in European countries to service customers locally as Switzerland’s allure fades.