The Swiss banking landscape around 1990

Five big banks and their profiles

At the end of the 1980s Swiss banking statistics distinguished between big banks, cantonal banks, regional and savings banks, loan associations, Raiffeisen banks, private bankers and foreign-controlled institutions. The category of big banks comprised five institutions, three of which had long been of international significance. The largest by balance sheet was the Schweizerische Bankgesellschaft (Union Bank of Switzerland, SBG), formed in 1912 from the merger of the Bank in Winterthur and the Toggenburger Bank and managed from Zurich. The Schweizerischer Bankverein (Swiss Bank Corporation, SBV) had its seat in Basel, where it had grown out of the Basler Bankverein of the nineteenth century, although its operations were increasingly concentrated in Zurich. The Schweizerische Kreditanstalt (SKA), founded by Alfred Escher in 1856, had its head office on the Paradeplatz. Behind these three came the Schweizerische Volksbank (SVB), a cooperative in origin with its seat in Bern, and Bank Leu, the oldest of the big banks, which traced its history back to the Zurich Leu & Co. of 1755.¹

The three leading institutions had different profiles. SBG under its long-serving leadership, which from the late 1980s included Robert Studer as chief executive and later chairman, was considered a solidly capitalised, conservative bank with a strong domestic lending business and a military style of hierarchy. From the middle of the 1980s it had begun to use its strong position in the home market as a base for expansion into a global financial institution. Its strategic aims were investment banking, international asset management and offshore private banking. Growth was to come mainly from within, with one notable exception: in 1986 SBG bought the London brokerage firm Phillips & Drew, which was a leader in institutional asset management.² The slow progress and high cost of this organic strategy would later become one of the arguments for a merger.

The Swiss Bank Corporation was the most outward-looking of the three. Its domestic network had grown remarkably quickly, from 29 branches in Switzerland in 1960 to 282 in 1991, while its international presence had extended to every continent since the early 1970s. Although its legal seat remained in Basel, it moved its capital markets division to Zurich in 1986 and major client services in 1991.³ The shift of functions from the Rhine to the Limmat anticipated a pattern that the merger of 1998 would complete. Zurich attracted trading, capital markets and the people who worked in them because the market itself, the stock exchange, the derivatives market and the largest concentration of institutional clients were located there.

The Schweizerische Kreditanstalt had followed a third path. After the Chiasso scandal of 1977, in which the bank’s branch in Ticino had channelled client funds into Liechtenstein vehicles and the bank suffered a loss of roughly CHF 1.4 billion, the new leadership under Rainer E. Gut rebuilt the institution and turned it towards investment banking.⁴ Gut, born in 1932 in Baar, had been a general partner of Lazard Frères in New York before he joined the executive board of the Kreditanstalt in 1973. He became the bank’s spokesman in 1977 and chaired its board from 1983 until 2000.⁵ Few Swiss bankers of the twentieth century shaped their institution for as long or as personally.

The smaller big banks

The Schweizerische Volksbank and Bank Leu occupied a different position. Both were substantial institutions with a domestic focus, but neither had the capital or the international network of the three leaders. The Volksbank reached a balance sheet total of CHF 44.6 billion in 1990, with a net profit of CHF 110.8 million and 6,355 employees. It had attracted unwelcome headlines at the beginning of the 1980s because of heavy losses on silver futures.⁶ Bank Leu, for its part, had suffered setbacks in the second half of the 1980s and had received several takeover offers before its fate was settled in 1990.⁷ Both institutions illustrate a basic fact of Swiss banking at the time. A bank could be large by domestic standards and still be too small to carry the costs of technology, international presence and risk management that the following decade would demand.

Below the big banks lay a dense network of cantonal banks, regional and savings banks and Raiffeisen cooperatives. In 1990 there were twenty-nine cantonal banks, most of which enjoyed an explicit state guarantee.⁸ According to the Historical Dictionary, the number of regional banks fell from 204 to 95 between 1990 and 1997.⁹ This dense structure reflected the federal organisation of the country and a lending culture in which mortgage credit to local households and small firms was the backbone of the business. It was precisely this lending that the real-estate crisis would hit.

A protected market

The Swiss market of 1990 was still a protected one. The Swiss Bankers Association had concluded a series of conventions among its members that fixed commissions for securities business, custody fees and other conditions. They limited price competition and secured margins for all members, large and small. Custody fees for open securities deposits, for instance, were calculated according to uniform rules laid down in Convention IV of the association.¹⁰ The big banks earned much of their domestic profit in this protected environment, whereas their international ambitions exposed them to open competition. That dual position explains a good deal of their behaviour in the 1990s. As the domestic cartel came under attack, the banks had to find new sources of revenue. The obvious candidates were the global markets in which the American houses set the pace.

In the Zurich of 1990 the stock exchange still operated on the trading floor. The derivatives exchange SOFFEX, however, had already introduced fully electronic trading. The Swiss Market Index was launched on 30 June 1988 at 1,500 points, and options on the index became tradable on SOFFEX in December of that year.¹¹ The combination of a new blue-chip index and an electronic derivatives market signalled that the technical infrastructure of the financial centre was ready for a different kind of business. Derivatives trading, index products and risk management by mathematical models would soon become the domain in which the Swiss Bank Corporation in particular sought to excel.

Notes

1. These founding facts are treated in detail in Parts B and C of this book. SIX Group, “Banks in transition” (Finance Museum blog), https://www.six-group.com/de/blog/banks-in-transition-finance-museum.html, on the founding of Bank Leu in Zurich in 1755 and of the Schweizerische Kreditanstalt; cash.ch, “Als die SKA die angeschlagene Volksbank übernahm”, 6 January 2018, https://www.cash.ch/news/top-news/als-die-ska-die-angeschlagene-volksbank-ubernahm-409325, describing the SVB as founded in Bern in 1869 and organised as a cooperative; Luca Froelicher, “The turbulent history of Credit Suisse”, Neue Zürcher Zeitung (English edition), https://www.nzz.ch/english/the-turbulent-history-of-credit-suisse-ld.1732364, on Alfred Escher as founding father of the SKA and on the end of the bank in 2023 after 167 years. ↩
2. HLS, “Schweizerische Bankgesellschaft (SBG)”, section on the period from the mid-1980s, https://hls-dhs-dss.ch/de/articles/041819/2015-03-18/. The article also records that in 1997 SBG acquired the German private bank Schröder, Münchmeyer, Hengst & Co., which gave it a foothold in private banking in Germany. ↩
3. Silas Gusset, “Eine Fusion mit Zwischentönen – bis heute”, Stadtgeschichte Basel (blog), 11 November 2020, https://stadtgeschichtebasel.ch/blog/eine-fusion-mit-zwischentoenen-bis-heute. ↩
4. HLS, “Crédit suisse”, section on the period after 1977, https://hls-dhs-dss.ch/fr/articles/041821/2012-11-27/. The Chiasso affair itself is examined in Part F of this book. ↩
5. Wikipedia, “Rainer Gut”, https://en.wikipedia.org/wiki/Rainer_Gut (cited for career dates only; Gut died on 11 October 2023). ↩
6. HLS, “Schweizerische Volksbank (SVB)”, https://hls-dhs-dss.ch/articles/041976/2012-10-30/. ↩
7. HLS, “Bank Leu”, https://hls-dhs-dss.ch/de/articles/041661/. ↩
8. HLS, “Kantonalbanken”, section on the 1990s, https://hls-dhs-dss.ch/de/articles/014065/. ↩
9. HLS, “Banken”, section on the late twentieth century, https://hls-dhs-dss.ch/de/articles/014061/2006-08-17/. ↩
10. Swiss Federal Supreme Court, judgment of 25 October 1991, BGE 117 Ib 481 (Schweizerische Bankiervereinigung v. Eidgenössisches Volkswirtschaftsdepartement), available at https://servat.unibe.ch/tools/DfrInfo?Command=BGerGet&FileName=b1117481.html&Format=Cache. ↩
11. SIX Group, “30 years at a glance” (SMI anniversary timeline), https://www.six-group.com/en/site/smi-30years/time-journey.html. ↩

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.