Bankers are having a rough time of it lately. It is not just that their companies are collapsing beneath them and their bonuses are the subject of global hate and derision. They also have to put up with the barbs of journalists (who are very familiar with being at the bottom of the popularity pile).
George Alogoskoufis is a hardly a household name outside Greece and EU financial circles. But the newly sacked Greek finance minister could yet become a poster child for politicans struggling to fight off economic decline and banking industry collapse. His demise was in large part due to a public perception that he was helping out the banks but ignoring rising joblessness.
For many, the words bank secrecy and offshore centre tend to raise James Bond-like scenarios of illicit bags of cash smuggled across the border to be locked away in a coded safety box. But often the rich of this world have legitimate reasons to open a protected bank account in Switzerland or other tucked-away offshore locations.
Some, like the residents of oil-rich Gulf countries, do not even have worry about the tax man as these nations are largely tax free. “Offshore does not mean that the money is undeclared,” said Jonathan Ivinson, head of tax at international law firm Hogan and Hartson.
Despite a global crack-down on money-laundering and tax evasion, bankers say many affluent clients from places like Latin America will continue to keep their money away, safe from a potential coup. In countries where corruption is rife, people would rather not let their local banker know how much money they earn for fear of kidnapping.
“It obviously depends a lot on how worried, how unhappy you are about the jurisdiction you live in,” said Prince Max, the second son of Liechtenstein‘s ruling monarch and the head of the
country’s largest bank LGT. ”If you live in a highly volatile and unstable country it is very rational for people to address this risk.”
- Lisa Jucca
Switzerland prides itself for being a reasonably generous country. Each year it gives 1.2 billion Swiss francs, or about 0.4 percent of its gross domestic product, in aid to poorer countries, a higher portion of aid than larger states such as Britain.
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More stress on its balance sheets is just about the last thing that the banking sector needs. The subprime mortgage crisis has already battered banks, leading to huge losses, scrambles for funding and free-falling banking shares. The S&P index of financial stocks has lost more than 30 percent so far this year. At its worst, the index plunged around 55 percent between a high in May last year and a low in June this year.