The Zürcher Kantonalbank in the twentieth century

Stability through crisis, 1914–1945

The statutory mandate kept the Zürcher Kantonalbank out of the speculative ventures that brought several Swiss banks to grief in the interwar period. The bank’s own history emphasises that it avoided speculative business because its mandate did not allow it, and that its concentration on the domestic market enabled it to pass through the depression of the 1930s relatively unscathed.¹ The contrast with the big banks, whose foreign exposure, particularly in Germany, caused heavy losses after the banking crisis of 1931, was striking (see Part F). Not all cantonal banks fared equally well. The HLS records that the cantonal banks of Neuchâtel and Bern had to undergo painful restructurings in the 1930s, and that of Graubünden in the 1940s.²

During the interwar years the bank found a new field of activity in the financing of housing. From the 1920s onwards co-operative housing societies became a major form of residential construction in Zurich, supported by the Kantonalbank with substantial lending.³ The link between the state bank and non-profit housing continued a line that ran back to the democratic programme of 1869, with its support for co-operatives founded on self-help. It also anticipated the housing clause of the current statute, which instructs the bank to promote home ownership and affordable housing. In the Second World War the bank participated in the national effort of the Anbauschlacht, the cultivation campaign. From 1942 its employees planted potatoes on communal land at Wollishofen and Brunau and then bought the harvest at preferential rates.⁴

The first half of the century also saw the arrival of federal banking legislation. The Federal Banking Act of 8 November 1934, adopted after the crisis of the early 1930s, treated cantonal banks as a special category. They were exempted from the requirement of a licence, were not required to undergo an external audit because internal revision was deemed sufficient, benefited from a discount on the capital requirements and were not subject to the rules on reserves. The special treatment rested on a constitutional provision requiring federal banking law to take account of the particular role of the cantonal banks.⁵ In effect, the cantonal banks remained under cantonal supervision, with the state guarantee serving as the substitute for federal prudential oversight. That arrangement lasted, with minor changes, until the 1990s.

Post-war growth and the new head office

After 1945 the bank grew with the economy of the canton. In 1945 it had 689 employees and a balance sheet of 1.6 billion francs. By 1990 the staff exceeded 4,000 and the balance sheet had reached 44.4 billion francs.⁶ The expansion was driven by the post-war construction boom, by the growth of savings in an increasingly prosperous population and by the extension of the bank’s services to new customer groups and products.

The bank’s architecture reflected its new scale. Between 1961 and 1970 it built a new head office at Bahnhofstrasse 9, designed by the architect Ernst Schindler as a building some one hundred metres long, which replaced the Henneberg house, the previous head office and a wing of the Haus zum Eidgenoss. The building is now protected as a monument. It was comprehensively renovated between 2011 and 2015 by the architects Anna Jessen and Ingemar Vollenweider, who raised the ceiling of the customer hall and opened four public entrances.⁷ According to the bank, the new head office opened in 1964 together with its first computer system, the building being completed in 1970. The bank also installed the first cash dispensers in Switzerland at three locations in 1969.⁸

The legal framework changed as well. A revised cantonal law of 1978 required the bank to achieve an “appropriate profit”. The requirement sounds modest, but it marked a shift in the understanding of the bank’s mission. Cheap credit remained the purpose. The bank was, however, also expected to earn enough to strengthen its capital and to contribute to the public finances of the canton. The bank adopted its blue-and-white logo in 1981 and launched online banking in 1997.⁹

The real estate crisis of the 1990s

The late 1980s brought an overheating of the property market in Switzerland, which the Kantonalbank, as the largest mortgage lender in the country’s most dynamic region, could not escape. The bank’s own history notes that the overheating of the real estate sector at the end of the post-war period created costs that it had to bear later, and that the real estate crisis led to the first major reorganisation of the bank in the 1990s. The bank reduced its dependence on real estate lending and strengthened its commission, service and trading businesses.¹⁰ That shift laid the foundation of today’s diversified bank, which earns a substantial share of its income from asset management, trading and capital markets.

Other cantonal banks suffered far more. The economic crisis and the collapse of property prices in the early 1990s struck the cantonal banks severely. Bern was hit hard in 1992 and Geneva in 2000. The number of cantonal banks fell from 29 in 1990 to 24 in 1999, of which 16 were pure state banks and 8 mixed banks, while their share of total banking assets fell from 20 to 13 per cent.¹¹ The Solothurner Kantonalbank was taken over by the Schweizerischer Bankverein in 1995, while the Appenzell Ausserrhoden cantonal bank was integrated into the Schweizerische Bankgesellschaft in 1996 after an unsuccessful restructuring.¹² The crisis demonstrated that the state guarantee was no mere formality. When cantonal banks failed, the cantons and their taxpayers had to pay.

The federal reforms of 1994 and 1999

The losses of the 1990s changed federal banking law. A partial revision of 18 March 1994 introduced a first Article 3a into the Banking Act, which allowed cantons to delegate the supervision of their cantonal banks to the Federal Banking Commission and made external audits compulsory. The decisive reform came with the revision that entered into force on 1 October 1999. It introduced a new definition of the cantonal bank and subjected all cantonal banks to the full supervision of the Federal Banking Commission, abolishing their exemptions from the licensing requirement, the audit rules and the special provisions on reserves. The state guarantee ceased to be a defining element of the cantonal bank and became optional. The capital discount and the exemption from contributions to deposit protection disappeared in the following years, as did the tax privileges.¹³

The Federal Banking Commission’s director, Daniel Zuberbühler, drew the conclusion that the legal category of the cantonal bank now served mainly to protect a name. In his analysis, the performance mandate, the Leistungsauftrag, was the real raison d’être of the cantonal banks. He also noted that the formal distinction between banks with and without a guarantee was marginal in practice, since cantons faced a de facto obligation to rescue their banks in any case. Geneva and Vaud served him as examples.¹⁴ For the Zürcher Kantonalbank, which had come through the 1990s without a rescue, the reform meant that it was now supervised like any other bank, while retaining its full state guarantee and its parliamentary governance.

Notes

1. Zürcher Kantonalbank, “Geschichte: Die nahe Bank seit über 150 Jahren” (cited above), section 1914–1945. ↩
2. Froidevaux, “Banche cantonali”, DSS (cited above), section on the difficulties of the 1930s and 1940s. ↩
3. Zürcher Kantonalbank, “Geschichte: Die nahe Bank seit über 150 Jahren” (cited above), section 1914–1945. ↩
4. Tages-Anzeiger, “Bernhardiner, Nashörner und ein Sachse” (cited above). ↩
5. Zuberbühler, “Die Kantonalbanken im Bankengesetz” (cited above), section on the Banking Act of 1934. The constitutional principle is today found in Article 98(1) of the Federal Constitution of 1999, which requires the Confederation to take account of the special role and status of the cantonal banks. ↩
6. Zürcher Kantonalbank, “Geschichte: Die nahe Bank seit über 150 Jahren” (cited above), section 1945–1990. ↩
7. Trollhauser, “Der Wandel baut mit: Umbau-Geschichten zum Hauptsitz”, reference brochure on the ZKB head office, https://www.trollhauser.ch/assets/Dateien/Referenzen_PDF/ZKB-Der-Wandel-baut-mit.pdf. ↩
8. Zürcher Kantonalbank, “Geschichte”, company profile (cited above), entries for 1964, 1969 and 1970. ↩
9. Zürcher Kantonalbank, “Geschichte”, company profile (cited above), entries for 1978, 1981 and 1997. ↩
10. Zürcher Kantonalbank, “Geschichte: Die nahe Bank seit über 150 Jahren” (cited above), sections 1945–1990 and 1990–2020. ↩
11. Froidevaux, “Banche cantonali”, DSS (cited above), section on the 1990s. ↩
12. Wikipedia (German), “Kantonalbank”, section on history, https://de.wikipedia.org/wiki/Kantonalbank. The HLS confirms privatisations and mergers in Solothurn and Appenzell Ausserrhoden: Froidevaux, “Banques cantonales”, DHS (cited above). ↩
13. Zuberbühler, “Die Kantonalbanken im Bankengesetz” (cited above), sections on the revisions of 1994 and 1999 and on the normalisation after 1999. Zuberbühler was director of the Federal Banking Commission. ↩
14. Zuberbühler, “Die Kantonalbanken im Bankengesetz” (cited above), sections on the state guarantee and the performance mandate. ↩

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.