Early business, 1870–1914

A difficult start and rapid growth

The bank had hardly opened when the Franco-Prussian War broke out in the summer of 1870 and disrupted the money and capital markets of Europe. The ZKB’s official history notes that the war temporarily hindered its business, but that the volume of credit grew rapidly once peace returned.¹ The following decades were a period of expansion. The bank built up a network of branches and agencies throughout the canton, which gave it a presence in the towns and larger villages. In smaller communes it relied on part-time collection offices, the Einnehmereien, of which there were eventually about seventy. They were typically run by the village priest, the teacher, a member of the communal council or the postmaster.²

The Einnehmereien were the organisational expression of the democratic idea. They brought the bank to the savers of the countryside through persons whom the villagers already trusted. The collection of savings through local notables also gave the bank a stable, granular deposit base, which financed its mortgage lending. That funding model, based on the savings of many small depositors and lent back as mortgages in the same region, was conservative. It remained the foundation of the bank’s business for a century. In 1872 the bank added a pawn office, the Pfandleihkasse, which lent small sums against movable objects to people who had no other access to credit.³ The pawn office still exists and is part of the bank’s statutory mandate today.⁴

The social character of the bank showed itself in practice. When phylloxera devastated the vineyards of the canton in the late 1880s, the bank waived default interest for the affected wine-growers, an act that its own history presents as characteristic of a “bank for ordinary people”. Such gestures were affordable because the bank’s tax position was favourable. In 1875 it was exempted from taxation, a privilege that lasted until the federal banking reforms of the late twentieth century put an end to the special treatment of cantonal banks.⁵ From 1902 the bank’s profits began to flow to the state treasury and to charitable funds, under a profit-sharing arrangement with the canton.⁶ The principle that the canton and, later, the communes share in the bank’s profits dates from this period and remains central to the political economy of the bank today.

Mortgage lending and savings

Mortgage lending was the bank’s principal business from the start. The Zürcher Kantonalbank became, in the words of its own history, the leading mortgage bank of the canton.⁷ The mortgage business was fed by savings deposits and by the bank’s bonds, the Obligationen, which were sold to investors throughout the canton. That structure gave the bank a long-term, low-cost funding base. For the borrower, it meant access to mortgages on standardised terms and at moderate rates. The bank’s interest policy had a stabilising effect on the whole regional market, because private lenders had to compete with an institution whose rates were set with public purposes in mind.

On a national scale, the cantonal banks as a group achieved a dominant position in the mortgage and savings markets. On the eve of the First World War, according to Yves Froidevaux in the HLS, cantonal banks controlled a third of total savings in Switzerland. In 1938 they held 56 per cent of bank mortgage loans while accounting for 40 per cent of total bank assets.⁸ The Zürcher Kantonalbank was the largest single contributor to that position. Its success confirmed the democrats’ diagnosis that there was a large unmet demand for mortgage credit on moderate terms.

Note issue until 1907

The note issue was the most visible sign of the bank’s public character. Every note bore the handwritten signatures of the bank’s senior officers, a burden that has become one of the bank’s favourite anecdotes. By 1883 the three officials concerned spent seventy full days a year signing some 129,000 notes by hand, since each note required their individual signatures to be valid. In 1886 the Kantonsrat approved printed signatures.⁹ The anecdote shows how seriously the bank took the legal formalities of note issue while reflecting the small scale of the operation in its early decades.

The note-issuing privilege of the cantonal banks was part of a broader system. Before the foundation of the Swiss National Bank in 1907, most cantonal banks functioned as issuing banks alongside the private issuing banks such as the Bank in Zürich.¹⁰ After the Federal Banknote Act of 1881 had subjected all issuing banks to uniform federal rules, the revision of the Federal Constitution in 1891 reserved the note monopoly to the Confederation (see Part C and Part F).¹¹ The Zürcher Kantonalbank issued its own notes until 1907, when the monopoly passed to the Swiss National Bank.¹² The notes still in circulation were withdrawn during a transition period in the following years.¹³ The cantons and the former issuing banks, the cantonal banks among them, received a large part of the share capital of the new central bank, while the cantons were compensated out of its profits for the loss of note-issuing revenue. This solution reflected their political weight in the Confederation.¹⁴

Staff, customers and everyday life

The records of the bank’s first decades, as recounted for its 150th anniversary, give a picture of an institution that was modest in its habits. For a time its only security measure was a St Bernard dog, which, according to the anecdote, frightened away bank customers as well as potential robbers. On 2 April 1909 Anna Aufenast, then 63 years old, became the first woman to manage an agency of the bank, at Hausen am Albis. She had applied for the post of savings clerk there as early as 1891. In 1913 the bank rejected a qualified applicant from Saxony because, as the minutes record, he spoke an unfamiliar dialect, a decision taken by five votes to three.¹⁵

Such details matter because they show the social texture of a state bank that was rooted in its region. The Kantonalbank recruited its staff from the canton, served customers from the canton and was governed by representatives of the canton. The same localism that made it trustworthy to the rural saver also made it cautious, even parochial, in its dealings with the wider world. That character would later become a strength in periods of international crisis, when the bank’s domestic focus protected it from the losses that struck the internationally active banks.

Notes

1. Zürcher Kantonalbank, “Geschichte: Die nahe Bank seit über 150 Jahren” (cited above), section 1870–1914. ↩
2. Zürcher Kantonalbank, “Unsere Bank – wie alles begann” (cited above). ↩
3. Zürcher Kantonalbank, “Geschichte”, company profile (cited above). ↩
4. Wikipedia (German), “Zürcher Kantonalbank”, section on the performance mandate, https://de.wikipedia.org/wiki/Z%C3%BCrcher_Kantonalbank. ↩
5. NZZ, “150 Jahre Zürcher Kantonalbank” (cited above). On the later abolition of tax privileges see Daniel Zuberbühler, “Die Kantonalbanken im Bankengesetz”, Eidgenössische Bankenkommission, https://www.finma.ch/finmaarchiv/ebk/d/publik/refer/pdf/Z_VSKB-Buch_d.pdf. ↩
6. Zürcher Kantonalbank, “Geschichte”, company profile (cited above), entries for 1888 and 1902. The NZZ also dates the profit-sharing arrangement to 1902: NZZ, “150 Jahre Zürcher Kantonalbank” (cited above). ↩
7. Zürcher Kantonalbank, “Geschichte: Die nahe Bank seit über 150 Jahren” (cited above), section 1914–1945. ↩
8. Yves Froidevaux, “Banche cantonali”, in Dizionario storico della Svizzera (DSS), version of 8 April 2015, https://hls-dhs-dss.ch/it/articles/014065/2015-04-08/. The same article appears in German as “Kantonalbanken” and in French as “Banques cantonales”. ↩
9. Zürcher Kantonalbank, “Unsere Bank – wie alles begann” (cited above). ↩
10. Yves Froidevaux, “Banques cantonales”, in Dictionnaire historique de la Suisse (DHS), version of 8 April 2015, https://hls-dhs-dss.ch/fr/articles/014065/2015-04-08/. ↩
11. Swiss National Bank, “Geld- und währungspolitische Chronik”, https://www.snb.ch/de/the-snb/organisation/history/geld-und-waehrungspolitische-chronik, entries for 8 March 1881 (Federal Act on the Issue and Redemption of Banknotes) and 18 October 1891 (adoption of a new Art. 39 of the Federal Constitution transferring the note monopoly to the Confederation). See also Part C. ↩
12. Zürcher Kantonalbank, “Geschichte: Die nahe Bank seit über 150 Jahren” (cited above), sections 1870–1914 and 1907. ↩
13. Swiss National Bank, “Geld- und währungspolitische Chronik”, https://www.snb.ch/de/the-snb/organisation/history/geld-und-waehrungspolitische-chronik, entries for 20 June 1907 (opening of business of the National Bank) and 20 June 1910 (the National Bank becomes the sole holder of the right to issue notes). ↩
14. Swiss National Bank, Annual Report 1908 (German), https://www.snb.ch/dam/jcr:c79b5006-b359-4fe1-a8d0-5ebbd49e83c6/annrep_1908_komplett.de.pdf, which records that of the 100,000 shares 38,769 were held by 23 cantons and 17,001 by 33 former issuing banks, and reports the compensation payable to the cantons under Art. 28 of the Bank Act. The details belong to Part F. ↩
15. Tages-Anzeiger, “Bernhardiner, Nashörner und ein Sachse” (cited above), for the dog (placed around 1871), Anna Aufenast and the Saxon applicant. SRF dates the dog to around 1900 and adds that Aufenast’s appointment was possible only because she was unmarried: SRF, “Es war alles ein wenig improvisiert” (cited above). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.