Background

“The lifting of the ban on loans and mortgages is a vital step for PostFinance”

With 2.7 million customers, over 4.4 million accounts, total assets of 125 billion francs and a universal service obligation for payment transactions, PostFinance is a systemically important bank and of major significance to the Swiss economy. The beginning of the consultation procedure on the partial revision of the Postal Services Organization Act at the start of June concerns the future of a key pillar of Swiss Post’s business. In an interview, Urs Schwaller, Chairman of the Swiss Post Board of Directors, explains why the lifting of the ban on loans and mortgages is the right way forward.

Camilla Krebs

Mr Schwaller, you’ve consistently underlined how important it is for PostFinance to finally enter the loans and mortgages market. Why is that?

There is no reason why PostFinance, which holds a banking licence with all the associated obligations, should be the only bank not permitted to provide loans and mortgages. We as Swiss Post as well as the politicians cannot simply continue to watch while PostFinance’s business model is eroded. Whereas PostFinance previously made a major contribution to Swiss Post’s positive overall result with its interest income, PostFinance is today turning from a source of financing into a financial burden due to the low-interest environment. This is a matter of great concern because PostFinance’s profit has made a huge contribution towards funding Swiss Post’s investments and public service provision for the benefit of the Swiss people.

Opponents argue there is no need for another provider on the real estate market and that PostFinance enjoys enough privileges as a “state bank”.

This argument simply isn’t true. The size of the Swiss market for loans and mortgages is currently 125 billion, and PostFinance’s entry will not cause it to overheat. On the contrary, we believe that PostFinance can make a significant contribution to the economy, especially in terms of supporting businesses and SMEs. It proved this by providing credit during the COVID-19 crisis. The ownership structure is not a valid line of argument either: the cantonal banks are not subject to any restrictions despite being part of the public sector and most actually have a general state guarantee from the relevant canton. The temporary, limited capitalization guarantee, provided for in the Federal Council’s bill, only aims to meet the tighter capital requirements set by the Swiss Financial Market Supervisory Authority (FINMA) due to the status as a systemically important bank. As soon as the new business model with the provision of loans and mortgages takes effect, this guarantee would be gradually reduced. 

What happens if the lifting of the ban on loans and mortgages is met with criticism during the consultation procedure and ultimately fails?

Even though the lifting of the ban on loans and mortgages is not the only step required to secure PostFinance’s future, the rejection of the bill would jeopardize PostFinance’s business model and ultimately also call into question Swiss Post’s public service provision. This would also leave PostFinance’s 2.7 million customers facing uncertainty. They include many Swiss SMEs which are dependent on PostFinance’s services for their day-to-day requirements. The potential revenue from the loan and mortgage business will ultimately benefit the Swiss people as it helps to maintain and improve public service provision in Switzerland without taxpayers having to foot the bill.

written by

Camilla Krebs