Steep increases in wealth and dividend taxes by Norway’s left-leaning government have prompted dozens of the Nordic nation’s rich to move to another prosperous, mountainous country to the south.
Their bankers now have Switzerland in their sights too.
DNB Bank ASA, the country’s largest lender, plans to open a representative office with two Norwegian-speaking employees in Zurich, with a focus on private banking services. Investment bank Arctic Securities AS is also setting up its shop in the largest Swiss city, hoping to boost its high-yield debt business. Its Nordic peer ABG Sundal Collier has established a subsidiary in Lucerne, servicing primarily corporate finance clients.
“Our strategy is to follow our clients,” Hallgeir Hollup, managing director for DNB’s Luxembourg unit, said by phone after the lender received an approval for the office from the local financial regulator Finma. “It is important to have a couple of people physically present just to improve the relationship with the clients.”
Plans by bankers to shift south signal that the small but significant migration by wealthy entrepreneurs could become permanent, bolstering Switzerland’s status as a low-tax haven. Norwegian lenders chasing their existing clients will compete with the likes of UBS Group AG and Julius Baer Group Ltd. for their business in the new surroundings.
Eighty-two rich Norwegians with a combined net wealth of about 46 billion kroner ($4.3 billion) left the country in 2022-2023, with 34 moving out last year alone, according to data from the Finance Ministry. More than 70 of those have moved to Switzerland, business daily Dagens Naeringsliv reported in January.
Under a double taxation treaty between the two nations — among the few in Europe that have opted to keep a wealth tax — the Norwegian exiles who meet the conditions can hand over a lump sum to Swiss authorities to escape their home country’s regime. Swiss taxation varies by canton, but the overall effect is a significantly lower percentage of wealth and income than most other European nations.
Arctic, which has been benefiting from growing demand for Nordic high-yield corporate bonds, seeks to capitalize on the trend by moving closer to clients in the region, Kjetil Bakken, head of group strategy, said in an interview in Oslo. At the same time, with Norwegian investors and entrepreneurs moving to Switzerland, “it’s a natural step” to operate next to them to develop relationships, Bakken said. Bakken plans to open the office himself this month, with scope to expand over the next few years.
“A lot of Norwegians we could probably cover by sending people down there on a weekly basis,” Bakken said. “But what we’ve been doing very successfully — the Nordic high-yield issues for both German companies and others — there we will need to be closer to them. For us, that’s where the primary business is.”
Political Backlash
At ABG Sundal Collier’s office in Lucerne, senior partner Peter Straume covers clients primarily in the technology, media and telecoms industries, a spokesperson for the company said. The bank offers corporate finance and advisory, as well as brokerage, project finance and private banking.
There’s already been political backlash over DNB’s planned move. Kari Elisabeth Kaski, a senior lawmaker from the Socialist Left, has argued that a lender where the government has the biggest stake “shouldn’t advise Norwegians on how to organize themselves away from the tax bill for the community.”
Prime Minister Jonas Gahr Store’s cabinet has increased the wealth tax burden by 55%, adjusted for inflation, according to privately funded think tank Civita. Estimated tax receipts from ownership, including dividend taxes, totaled 65 billion kroner last year, versus 38 billion in 2021, it said. Meanwhile, a government-appointed tax advisory committee suggested in 2022 to cut the wealth tax rate and raise the tax threshold to reduce its harmful effects.
For Hollup at DNB, there are no signs among his clients in Switzerland that once they’ve arrived and settled down they would have much inclination to move back even if policy changes. There are many similarities with Norway, such as the natural setting, while it’s “a country that really works,” he said.
“They are already getting involved in business in Switzerland as they are innovative and impatient people,” Hollup said. “They have already started looking into investments, for example, whether there’s commercial or residential property to buy, and have started establishing Swiss companies. So, it’s a two-fold issue of losing tax revenue for Norway and the risk that a lot of brain capital has left the country.”
