What does an iconic t-shirt tell us about the competition between Singapore and Switzerland for offshore money management? Citi's highest-ranking Swiss executive makes a frank assessment based on a patriotic example.
Kristine Braden is a veteran of the New York-based bank – and of Asia, where she spent much of her career. She took over Citi's Swiss operations including its private bank almost 18 months ago.
Braden spent three weeks in Singapore this summer and brought a t-shirt imprinted with «1291» – the date of Switzerland's founding as a confederation and a popular theme among patriots – as a gift for a friend.
Singapore: 51
The equivalent design in Singapore would read 51, the friend told Braden, underscoring the city-state's youth not just as a modern state but also as a financial center.
«Switzerland is still very attractive because of its longevity and stability – it’s the calm in the storm. There hasn’t been a lack of business here and that’s a good thing,» says Braden, noting that the Swiss market expanded last year.
The growth of Singapore's relatively new financial center is closely entwined with Switzerland, which has served as a model and blueprint for the Asian hub's development under former Prime Minister Lee Kuan Yew.
Surge in Singapore vs Swiss Stagnation
However, there are key differences between Switzerland's and Singapore's setup and the one-time student has turned into a formidable opponent.
Singapore's $1.5 trillion in assets pale in comparison to Switzerland's $3.7 trillion, but the Asian center is projected to grow more than 9 percent in coming years, according to statistics from Boston Consulting Group. This far outpaces Switzerland, which is expected to expand roughly 2.6 percent.
While Singapore is without question a growth market, its main audience remains Asian clients, Braden says, which poses risks. 1MDB is the first real test of how the Monetary Authority of Singapore – central bank, financial regulator, and industry cheerleader in one body – handles bad guys.
«Pass-Through» Country?
«One challenge for Singapore is they sit within Asia which itself is still developing. A lot of money flows through, whether 1MDB or something else, and they have to be vigilant,» Braden says.
As closely as Singapore has tracked Switzerland in building a financial center, the city-state is keen to avoid some of the money-laundering scandals that the alpine nation has faced.
With an AAA-rating and beefed-up controls on fund origin, Singapore needs to ensure that it isn't abused as a «pass-through» country for ill-gotten gains, she says.
«MAS' focus on their new anti-money laundering organization is to strengthen that area and to make sure they keep Singapore safe.»
