Swiss Post to Spin Off Bank

Swiss Post to Spin Off Bank

PostFinance, the banking arm of Swiss Post, may soon be spinning off from its parent company in the summer of 2013. However, independence from the Post won’t place it on the same playing field with other banks in the industry, as certain restrictions still apply.

When PostFinance begins life as its own separate entity, Swiss Post will still, technically, own it. The Post will own all shares of the financial institution when it ventures out on its own. This places ownership of the bank squarely in the hands of the Swiss government, as they own the Post Office.

As a state owned entity, PostFinance will continue to be subject to restrictions that prevent it from engaging in certain competitive activities that could take business away from existing banks. This limitation is welcome news to competing banks, but that insulation may not last indefinitely.

Currently, PostFinance is prohibited from issuing loans. Considered a major revenue source for other banks, the postal bank must direct customers seeking loans to other financial institutions. This lucrative business has seen an uptick in demand as the country recovers from the recent financial crisis. When PostFinance shares eventually transfer into the hands of the public, the rules that limit its growth as a state-owned organization have the potential of being removed. If that were to happen, an unshackled PostFinance could prove a worthy competitor in the business and mortgage loan market.

Do you think a postal entity should be able to compete with private businesses in traditionally non-postal related markets?

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3 Comments

  1. Grannybunny

     /  January 30, 2013

    I definitely believe USPS should reinstitute it’s banking program. I grew up in the era when people could have bank accounts through the Post Office, and remember when, every Tuesday, a Postal employee would come to our classroom to accept our tiny deposits — usually, just coins we had saved — and enter them into our bank books. It was a wonderful opportunity for children to begin a life-long habit of saving. Large segments of our current population are “unbanked,” and — as a result — have to pay unconscionably high fees to perform even simple financial transactions. The Postal Service could provide many of those same transactions at much more reasonable costs, with the assurance of reliability due to its trusted brand.

  2. Jonn

     /  January 31, 2013

    I think too many people don’t save anything for later in life. I was just watching the news this morning about how 73% of adults 45 to 59 are financially supporting their adult kids. Their parents aren’t going to be around forever, and then what are they going to do? If the postal service can encourage kids and young adults to save somehow, then there will be fewer people on public assistance later on.

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