Switzerland faces competition from Asian IFCs
Switzerland remained the leading offshore asset booking centre in 2014, but with the rising new wealth generation in the Asia-Pacific region and its proximity to booking centres such as Hong Kong and Singapore, the country is expected to face increasing competition, reports Gulf News.
Switzerland booked US$2.4 trillion (Dh8.8 trillion) in wealth from abroad last year which accounts from 25 per cent of total offshore assets globally. “Looking ahead, Switzerland will need to reinvent itself to resist the threat from fast developing Asian booking centres as preferred locations for offshore wealth,” said Markus Massi, Partner & Managing Director of BCG.
BCG’s Global Wealth 2015 study said Switzerland remains under intense pressure from both European and US tax authorities seeking to crack down tax evasion.
Currently offshore hubs in Hong Kong and Singapore represent the most significant challenge to Switzerland’s position. These two locations accounted for 16 per cent of global offshore assets last year are expected to grow in prominence with the expected compounded annual growth of 8 per cent and seven per cent respectively over the next five years.
These two centres together are projected to hold 18 per cent of global offshore assets in 2019, owing mainly to the creation of new wealth in the Asia-Pacific region. They are also expected to be fastest-growing offshore centres, along with Dubai, which is projected to have 8 per cent annual growth.
Growth rate
The UK continued to be a preferred booking centre in 2014 with US$1.1 trillion (11 per cent) to total offshore money. The Caribbean and Panama with US$1.2 trillion bookings accounted for 12 per cent of global offshore wealth remaining an important booking centre for both North American and Latin American clients.
Offshore bookings are expected to grow at the rate of seven per cent over the next five years owing mainly to the creation of new wealth in Latin America and is expected to hold eight per cent of global offshore assets in 2018.
While Luxembourg is expected to remain stable in asset bookings with a six per cent share of global offshore asset bookings, the BCG study expects Channel Islands to decline in prominence with total global offshore assets booked there declining from 13 per cent in 2014 to 12 per cent in 2019. The study attributes this to a decline in global trust business driven by increasing tax pressures.
