The amount of money deposited in Swiss banks shrank by more than a quarter last year as the global financial crisis hit asset values and customers withdrew large sums amid concerns about probes into the offshore banking industry. Figures released by the Swiss National Bank on Monday show total deposits fell 27 percent, or 1.41 trillion Swiss francs ($1.21 trillion), to 3.82 trillion francs - their lowest since August 2005. Deposits from foreign customers shrank by 882 billion francs, while Swiss customers had 531 billion francs deposited in their country's banks, according to the SNB's monthly statistical bulletin. Foreign private customers saw the highest proportional drop in assets - 36 percent or 371 billion francs - leaving only 671 billion francs worth of deposits in Swiss vaults. That is the lowest deposit amount from foreign private customers since the end of 1998. Deposits by foreign institutional customers dropped 23 percent, or about 417 billion francs, to 1,386 billion francs. Domestic private customers had 417 billion francs deposited by the end of the year, 28 percent less than in 2007. The report did noy break the figures down by institution, but Switzerland's two flagship banks have both suffered heavy losses and reported billions in asset writedowns and customer withdrawals last year. Earlier this month, Credit Suisse Group reported full-year withdrawals of billions of francs, and net losses of 8.2 billion francs. UBS AG said net withdrawals reached 226 billion francs in 2008, compared with inflows of 140.6 billion francs the previous year. The bank posted a full-year loss of 19.7 billion francs earlier this month, the biggest in Swiss corporate history. A high-profile court battle in the United States over UBS's cross-border business also has harmed its image in the eyes of foreign customers. The case has become the focus of US Senate hearings on offshore tax evasion. “People aren't sure where UBS is going,” said Axel Merk, chief investment officer at California-based Merk Mutual Funds. UBS shares dropped 9.1 percent Monday to reach an all-time low of 10 francs. Merk cautioned against attributing all of the deposit losses to withdrawals, noting that falling asset values on the global markets would also have played a role.
