The Swiss Private Bankers' Association warned that Switzerland must change its tax rules to attract more hedge fund managers to the country or risk losing its position as a world financial centre.

The SPBA was reiterating the strategy set out in the Swiss Financial Sector Masterplan, published last September, which was aimed at enabling the country to gain a place among the top three centres of international finance, behind the US And UK, worldwide by 2015.

Speaking at the SPBA's annual press conference in Berne, Jacques Rossier, a partner at Geneva-based Lombard Odier Darier Hentsch, said the masterplan was a precondition for the survival of private bankers.

He listed six key issues which needed to be addressed in order to create the conditions for Switzerland to continue as the primary location for asset management:

• Improving the environment for trusts and foundations.
• Maintaining the EEA agreement with the European Union.
• Phasing out of stamp duty.
• Reasonable implementation of the recommendations of the Financial Action Task Force.
• Clear and efficient procedures in the field of international legal assistance.
• Clear and competitive regulatory and tax framework for hedge funds.

The last point, said Mr Rossier, was of primary importance given the huge potential for these activities in the financial marketplace.

Switzerland, he said, was easily the world's largest manager of foreign wealth and the partnership private banks are still a formidable power, with assets under management rising to SFr510 billion ($463.6 billion) in the year to September 2007.

But hedge funds and other alternative investments – which already make up some 20 to 50 per cent in an average client portfolio – were virtually all produced abroad, forcing the banks to buy them from third parties.

"Today," said Mr Rossier, "we are unfortunately very far from being included in this emerging sector of the alternative asset management in Switzerland. There are about 9,500 'hedge funds' in the world, of which only four are domiciled in Switzerland. Of the approximately $1,500 billion managed in the sector worldwide, only $10 billion is managed from Switzerland.

"This undoubtedly stems from the fact that today hedge fund managers not just in London and New York, but also in Frankfurt and Paris, pay only 10 to 15 per cent in taxes, as compared to 50 per cent in Switzerland."

The SPBA comprises 14 banks: Baumann, Mourgue d'Algue, Bordier, Pictet, E. Gutzwiller, Rahn & Bodmer, Gonet, Reichmuth, Hottinger, Wegelin, Landolt, La Roche & Co Banquiers, Lombard Odier Darier Hentsch and Mirabaud.