Not long ago Swiss banks proudly displayed their founding years in their logos. Not least when the bank's origins could be traced back to the 18th or 19th centuries. Swiss banking assumed an aura of eternal strength that attracted customers from abroad.

Wegelin for instance boasted the number of 1741, making it the oldest bank in Switzerland – quite a feat in the country of Heidi, chocolate and yes, banks.

Bank Leu from Zurich was long behind its cousin from the east of Switzerland, having been founded in 1755. It kept the year even after the merger with Clariden and the integration into Credit Suisse.

Bank Hottinger (pictured), also based in Zurich, Switzerland's biggest financial centre, displayed the year like a batch of honor – in its case 1786. Until recently that is, because last week it went bankrupt. The worst that can happen to a banking institute.

Three Down

Hottinger, Leu, Wegelin: All three institutes, proud of their century-long history, don't exist anymore.

Wegelin wrongly believed they could take on the U.S. government and stash away the money of tax fugitives.

The managers of Clariden Leu ruined a bank of more than 250 years within the space of five years. The remains are now part of banking giant CS.

And Hottinger, whose owners spent their time and energy fighting each other instead of devoting some attention to the seismic shifts in the world of finance and to adjusting their business strategy accordingly.

Caught Sleeping

«Neue Zuercher Zeitung» is wrong to say that Bank Hottinger is a victim of change. Instead, the elitist owners with the proud name of Hottinger were simply caught sleeping by a world that stopped taking tradition into consideration.

The fate of the three institutes should serve as stark warning to the remaining private bankers. You risk more than just business if you still rely on the cash from the black money times.

The word is making the round that bankers born with a silver spoon in their mouths fold as soon as they meet the slightest resistance. Taking their customers along into the abyss. The reputation of Swiss private banking is at stake.

Stop the Rot

The representatives of the Swiss financial market failed to stop the rot. Where was the financial market regulator Finma, the central bank, the Finance Ministry and where was the Bankers Association when the private banks got into trouble?

Of course it is not the responsibility of the state to save companies from collapsing. But the collateral damage to the financial market isn't to be underestimated by the demise of one institute after another.

They acted when the biggest bank of Switzerland, UBS, stared into the abyss. The sheer size meant that the bank had a leverage over Swiss Inc. even in a state of near collapse. UBS was saved.

Disproportionate Response

Small banks don't have the privilege of their big cousins and are left to fend for themselves. The disproportionate response by the state to the problems of the banks adds fuel to the impression that Finma doesn't care about smaller institutes, because they are difficult to control and create a lot of work. This is a malicious rumor of course, but it is frequently aired in discussions with top bankers in Switzerland.

And where was the central bank when the private banks capsized? The Swiss National Bank hasn't stopped criticizing CS for its capitalization. Perhaps the people in charge were too concerned about the strength of the franc and simply ignored the precarious situation of many traditional banking institutes.

Time for Preemptive Pragmatism

It doesn't surprise that the bankers association hasn't been of much help in recent years. The organized voice of Swiss banking has never been an eager player and at best reacted to the problems of the institutes it represents. Too much has it been embroiled by internal conflicts and worries about its future.

Perhaps it is not the business of the association to get involved in the business of endangered banks, but the effects of the serial demise of banks on the industry as a whole might ask for some preemptive pragmatism.

Waterloo

The industry relies on the trust of customers not just in Switzerland, but to a large degree on foreign clients. Continuing the centuries old tradition of Swiss banking is for the reputation of the industry too important to just sit idly by and watch the companies disappear one after another.

What is left of Swiss banking seen from a foreign perspective? The banking giants which can't get rid of the «bankster» image, banking secrecy that has been dismantled by certain political interest groups and a tsunami of regulation that stifles smaller banks.

Answer: Nothing much that would distinguish the Swiss banks on a global level. And even less if the proud private banks meet their Waterloo.