Comparative national context ubs

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Comparative national context ubs

  1. 1.  Both the U.S. and Switzerland have executive leaders (President) and the legislative branch (parliament/congress) is a bicameral system.  Unlike the U.S. where citizens elect representatives as trustees to make informed decisions, Switzerland is closer to a direct democracy where the Swiss citizens are given rights to propose legislations.  In terms of personal banking and investments, USA and Switzerland have regulatory bodies that have legal jurisdiction. United States of America Switzerland Internal Revenue Service FINMA (Swiss Financial Market Supervisory Authority) Securities and Exchange Commission  When it comes to the financial markets in Switzerland, FINMA protects creditors and investors and their interests. It oversees the business practices and has authority over exchanges of securities, banks and other investments.  In the USA there are two government agencies particularly important to the banking industry. The IRS is responsible for collecting taxes for the central government and has the ability to enforce Congress’ tax laws. The SEC overlooks all aspects of securities including dealers, brokers, advisors and consultants. Financial information that must be made public is reported to the SEC and made available to players in this industry, allowing fair market activity.
  2. 2.      Switzerland is one of the most stable countries in the world to the economic perspective. The policy of the long-term monetary security and political stability has made Switzerland a safe place to invest. The privacy banking policy also attracts investor to deposit their money into the Swiss bank in order to avoid taxes to their home country. Switzerland is one the wealthiest countries in the world, The GDP per capita is consider one of the highest in the world even exceed United States. The major industries of Switzerland are banking, tourism and international bureaucracy, these industries are less likely to have downturns also due to the policy of the privacy banking
  3. 3.        United States is the world s largest single national economy, it has the largest nominal GDP with $16.62trillion in 2012 which occupied 1/4 of the nominal global GDP United States also has the largest purchasing power parity in the world, approximately 1/5 of the global total. United States has maintained a stable GDP growth rate and a moderate unemployment rate. The GDP per capita in United State is very similar to the Switzerland; they are both considering one of the top ten countries in the world. Besides trading, United States is also one of the largest and most influential financial markets. There are nearly 60% of the global currency reserves have been invested in the US dollar and 24% have been invested in euro. The Stock Market of the United States is also the largest of the world, the foreign investment in the US total almost $2.4 trillion. 132 of 500 world s largest companies settle their headquarter in the United States, Twice as much as any other country.
  4. 4. In Switzerland , the banking industry is one of the largest components of their economy.  Whether it is retail, private, or corporate banking, Swiss banks are associated with top notch service.  Economic and political stability have been trademarks of Switzerland which has led people to feel safe and in avoidance of risk when placing assets in Swiss accounts.  Through federal law, privacy of account information is requires which also adds a sense of security for clients.  Unfortunately for the United States, the banking industry does not have as great of a reputation as that of Switzerland.  Although the United States is a first world, developed nation as is Switzerland, financial crisis has struck more than once.  The Unites States economy is comprised of many leading industries and the world of finance/banking has more risk associated with it in the U.S rather than in Switzerland. 
  5. 5. According to the World Bank… Switzerland USA Patent applications in science & tech 1,597 (2011) 247,750 (2011) Gross Domestic expenditure on R&D $16.3 Billion (2008) $415.2 Billion (2011)  The technology in banking/finance in both the USA and Switzerland is rapidly changing as this industry becomes ever more globalized.  Vital for cross border banking, like UBS’ operations between Switzerland and USA, video banking creates an easy communication line for financial consultants, analysts and experts to advise clients.  Digital banking has also increased the experience for customers in a fast paced world because financial information can be accessed quicker than ever with internet and mobile banking. Money can be transferred, deposited and withdrawn internationally via mobile phone, tablet or computer.
  6. 6. Hofstede’s Cultural dimensions
  7. 7.  USA and Switzerland are culturally similar and different in several ways. According to Hofstede’s cultural dimensions both USA and Switzerland have low power distance as well as high masculinity. People of these nations are open to questioning their superior and do not follow orders blindly. In the work place there is less supervising and decentralization of power is exhibited. Cultures that are high in masculinity like the Americans and the Swiss, place value on things like material gains, earnings, promotions, independence and wealth. School systems and companies/organizations in the USA and Switzerland push for high performance and achievement.  Both of these nations differ in their levels of individualism, uncertainty avoidance and long term orientations. USA and Switzerland are very individualistic countries in that their citizens tend to have concern for only themselves and immediate family members. Switzerland and USA base rewards on merit and achievement. USA is regarded as one of the most individualistic countries in the world which is why they score a 91 in this category on Hofstede’s cultural dimensions. Switzerland has a moderately lower score because although they are very individualistic like the USA, the collective does hold some importance to the citizens and belonging to a group is more common in Switzerland than the USA.
  8. 8.  In terms of uncertainty avoidance, the USA is much less risk adverse. US citizens are more willing to accept risk although the consequences are unknown. Unlike the people of USA, the Swiss are more careful with their decisions as they prefer security and trust only experts with decision making tasks.  Both the USA and Switzerland are short term oriented cultures but like the cultural dimension of individualism, the USA is regarded as a world leader in short term orientation. There is little motivation to save for the future and quick results are preferred. Trends and modifications in all fields change rapidly and keeping up with the most recent innovation or creation is socially valued.  When analyzing Trompenaar’s cultural dimensions, the most relevant dimension in terms of business relations between the USA and Switzerland is Achievement vs. Ascription. The US and Switzerland are high achievement cultures which means that status is directly correlated to performance. Top performers are given top rewards and those who work hard will pave their own path to success.
  9. 9.  To put the UBS crisis simply, Swiss private bankers employed by UBS offered services to rich U.S. clients which allowed them to evade U.S. taxes. When placing assets in UBS Swiss bank accounts, U.S. clients neglected to claim their foreign accounts on their tax forms and UBS banks/bankers did not provide information about these off-shore accounts.  The Political and legal differences between U.S.A and Switzerland could have caused this crisis because Switzerland had a banking privacy act that did not allow them to disclose client information. FINMA did not regulate the UBS private bankers because they may have not known about the taxes received by foreign entities such as the IRS or SEC. Once the IRS and SEC realized the tax evasion scheme they immediately investigated UBS and filed lawsuits to retrieve the taxes owed. FINMA has changed operations for UBS after this crisis because they have now imposed a regulation where UBS must inform FINMA of business initiatives in investment banking.  Being that both U.S.A and Switzerland are culturally individualistic, masculine and based on achievement, this crisis was exasperated. The U.S. Clients were easily enticed by the idea of maintaining more wealth and assets through the schemes provided by Swiss Bankers. UBS private bankers sought to gain recognition and money as well by opening as many accounts as possible through illegal tactics. By creating these off shore accounts in a foreign country, U.S. citizens proved their tolerance of risk. Americans allowed their accounts and assets to be handled by foreign bankers without regard for the legalities and consequences that could arise in their home country.
  10. 10. FINMA. "Mandate." FINMA. FINMA, 2008. Web. 30 Sept. 2013. <http://www.finma.ch/e/finma/Pages/Ziele.aspx>. Geert Hofstede, Gert Jan Hofstede, Michael Minkov, Cultures and Organizations: Software of the Mind. Revised and Expanded 3rd Edition. New York: McGraw-Hill USA, 2010 Geert Hofstede, Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations. Second Edition, Thousand Oaks CA: Sage Publications, 2001 "The Investor's Advocate:How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation." How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation (Securities and Exchange Commission). N.p., n.d. Web. 30 Sept. 2013. <http://www.sec.gov/about/whatwedo.shtml>. Perez, William. "The Internal Revenue Service." About.com Tax Planning: U.S. N.p., n.d. Web. 30 Sept. 2013. <http://taxes.about.com/od/internalrevenueservice/tp/internal- revenueservice.htm>. PKF. "Doing Business in Switzerland." PKF, n.d. Web. 29 Sept. 2013. <http://www.pkf.com/media/608952/doing-business-in-switzerland.pdf>. Selvaggio, Leonard. "Banking Strategies." Leveraging Technology for 2012. N.p., 22 Feb. 2012. Web. 29 Sept. 2013. <http://www.bai.org/bankingstrategies/operations-andtechnology/technology-and-information/leveraging-technology-for-2012>. "TRADING ECONOMICS." TRADING ECONOMICS. N.p., n.d. Web. 29 Sept. 2013. <http://tradingeconomics.com/>. Turner, Giles. "How Much Does the Finma Action Really Matter to UBS?" The Source RSS. N.p., n.d. Web. 30 Sept. 2013. <http://blogs.wsj.com/source/2012/11/26/how-much-doesthe-finma-action-really-matter-to-ubs/>.

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