High fees and charges are very much a part of trading shares, ETFs, funds, structured products, bonds and other securities in Switzerland. That not only applies to the costs of trading and custody, but also to fees charged for the removal of securities. These fees primarily occur when investors transfer their securities from one bank to another.
Physical and electronic transfers
Swiss banks make a difference between electronic (book entry) and physical delivery of securities. Physical delivery (at the counter, for example) is normally more expensive than electronic transfer. The origin of the securities in question is another factor which affects the way in which transactions are priced. Transferring foreign securities between banks is often more expensive than transferring Swiss securities. Finally, many banks add a markup when you opt for delivery versus payment (DVP) rather than delivery versus free (DVF). Some banks do not even offer DVP transactions.
High transfer fees
A moneyland.ch study of 40 banks reveals surprisingly high transfer fees. On average, the removal of Swiss securities costs 100 francs per position when performed electronically. Fees for physical delivery are higher, averaging 170 francs per position. Transferring foreign securities between accounts costs, on average, 120 francs per position for electronic transfers and 230 francs per position for physical transfers. Those averages do not account for additional expenses like VAT and foreign transaction fees. Fees are charged for each position and not for the entire deposit.
This example helps clarify the cost of transfers: An investor’s portfolio, held at a Swiss bank, lists one Swiss ETF, five Swiss stock positions, five U.S. stock positions and five European stock positions. If that investor transferred their securities to another bank electronically, they would pay (on average) 1800 francs for the transfers. At the most expensive banks this transfer would cost up to 2400 francs. The cost is determined by the number of positions being transacted rather than by the amount of individual securities.
Online brokers among the most affordable
Online brokers not only charge the lowest transaction and custody fees, they generally also charge the lowest securities transfer fees. Online brokers Saxo Bank, Swissquote and Strateo, for example, charge “only” 50 francs for the electronic transfer of a securities position. CornèrTrader does not charge account transfer fees at all. At other Swiss banks, the cost of transferring securities electronically can be as high as 150 francs, while physical delivery can cost as much as 500 francs.
Removal of transfer fees is not likely
The high fees charged for transfers have recently been called into question by watchdogs and the State Secretariat for Economic Affairs (SECO). The argument is that the high costs of inter-bank transfers are completely disproportionate to the actual cost of transferring securities and discourage competition in the marketplace. Presumably, high fees exist primarily for the purpose of discouraging customers from changing service providers.
In spite of raised awareness on the part of investors, a survey by moneyland.ch revealed that the majority of banks expect to maintain their current transfer fee structure. PostFinance, for example, considers its fees to be “fair and transparent”. No adjustment of fees is expected within the foreseeable future. While a complete dismantling of transfer fees across the industry is not likely, a possible lowering of fees across banks in the future cannot be ruled out.
Tips for changing service providers
One way that investors can avoid paying transfer fees when switching accounts is to sell their securities ahead of the move. However, depending on the securities owned, the process can be can be time consuming and generate transaction-based expenses. There is a more affordable alternative: The moneyland.ch survey found that many banks cover the cost of transferring securities – either in whole or in part – for new customers.
Many banks only cover the cost of transfers for new customers which show frequent trading potential. But it is always worth asking your prospective new bank whether or not they will cover your transfer fees.
Footnote: If you want to receive a tabular overview (in PDF format) of transfer fees charged by banks, please send a short request to info«@»moneyland.ch.