There is a strong belief inside Switzerland that it should not bow to international pressure and that attempts to abolish secrecy is largely based on other countries’ own interests. According to a recent survey conducted by the Swiss Bankers Association, more than 80 per cent of Swiss people support continued bank secrecy there. A straw poll of Swiss bankers contacted by WealthBriefing were unanimous in their belief that whilst co-operation may increase, banking secrecy will stay.

Philippe Pulfer, a partner at Swiss law firm Froriep Renggli, pointed out that Swiss rules will not be relaxed simply because foreign tax authorities find them irksome.

“Because these must be prompted by different feelings by the Swiss people as to what they think is right. As long as Swiss citizens want their privacy protected it will be difficult for the rules to be changed,” Mr Pulfer said.

He continued: “Foreign countries often criticise Switzerland about secrecy, but this secrecy is an internal (Swiss) matter. Switzerland is a sovereign country, and a foreign government cannot write directly to a Swiss bank demanding information. It has to go through co-operation between governments. The UK authorities, for example, have to send  letters to the Swiss authorities. It is for the Swiss authorities to decide these matters.”

Secrecy is no doubt an important element of the private banking model in Switzerland and the Federal Council is strongly committed to retaining it. In discussions with officials in Brussels in May, the Swiss Finance Minister said the subject was not open to negotiation and was not obliged to talk to the European Union about a revision of the agreement on the taxation of savings income before 2013. The minister also said that where there is a criminal aspect to an investigation, Switzerland has demonstrated that it is willing to lift the veil of secrecy.

The QI (Qualified Intermediary) agreement merely prevents US investors from holding US securities in Switzerland unless they declare them to the US Internal Revenue Service. It does not prohibit US persons having Swiss accounts or indeed require them to declare euro assets to the US authorities, James Nason, spokesman for the Swiss Banking Association, told WealthBriefing.

While secrecy laws mean that Switzerland will share information in the case of tax fraud, the key point is that the alleged criminal activity has to be recognised as such within Switzerland, said Mr Nason.

“In Switzerland, the tax form is not an official legal declaration so merely not declaring assets to the foreign tax authorities is not regarded as a crime in Switzerland,” he said, also pointing out that the Swiss authorities do not allow fishing expeditions.

The Swiss will and do co-operate in the case of tax fraud, which includes issuing false invoices or certifications. If banks give false statements as to the value of or existence of assets, this is regarded as providing assistance in tax evasion. However, to Swiss banks, a clients’ tax reporting is their own affair.

"The Swiss have worked out a nifty balance between allowing maximum individual freedom on the one hand while, on the other, simultaneously protecting that degree of collective public provision which the Swiss people believe necessary for a civilised life. The Swiss tax system encourages a high degree of taxpayer honesty without having to make tax evasion a criminal offence and without having to trample on privacy. If other countries cannot come to a similar arrangement with their citizens, that is not Switzerland's fault," said Mr Nason.

However, one London based private banker, who asked not to be named, predicts that Swiss-style bank secrecy is set to crumble and traditionally liberal Swiss rules on the level of disclosure people must give on tax issues are also likely to get much tougher going forward.

Citing the recent UBS case in the US, in which an ex-employee of Swiss bank and the world's largest wealth manager UBS had admitted helping citizens evade paying taxes had put a powerful spotlight on Swiss rules, he said that national lawmakers in Bern could be under pressure to open up the system.

“The world’s leading governments are beginning to find ways of getting information about the money going into banking systems in these countries and they could, as a measure, impose a levy on such inflows of some sort,” the private banker said.

The same banker also predicts that the EU may tighten reporting rules around non-domiciled individuals living in the UK with Swiss-based assets.

Many firms are hedging their bets and Gerard Aquilina, vice-chairman, Barclays Wealth, said there is a growing interest among global financial institutions to increase their market share in domestic, local, on-shore private banking, with many institutions establishing a local presence in many developed and emerging market countries, from Spain to India, Canada to Brazil to China.

There has been much more pressure from regulatory bodies to control money laundering, combat terrorism, and reduce tax evasion and banks who derived their revenues from purely off-shore private banking have been hedging their future earnings by expanding into on-shore wealth management, Mr Aquilina said.

Mr Aquilina said assets in Switzerland and other offshore centres should be more properly classified as "fear capital" rather than "flight capital" as these jurisdictions offer stability and protection of identity in the face of a fear of dictatorship, brutal inflation and severe currency devaluation.

“Clients who availed themselves of amnesty and repatriated assets have often returned to offshore centres (and declared their holdings to their local authorities) because of the higher level of service and investment offering than is available locally, said Mr Aquilina.

“So while I anticipate a growing increase in the level and attention to on-shore private banking among international wealth managers reflecting a growing sophistication of the wealth management services available locally, I believe Switzerland and other off-shore centres will continue to serve an important - though more balanced - proportion of global client wealth,” he said.

Switzerland is so well established internationally that it is likely to maintain its leading position for some time and many in the industry believe that there is much to commend it over and above its secrecy laws.

With the increasing scrutiny of offshore banking environments, Swiss banks have been forced to re-evaluate and develop their offerings focusing on good reporting, sophisticated investment techniques and concentrating on the famous Swiss attention to detail, along with further developing their know-how in cross-border tax reporting or international asset management.