Swiss banks are often pictured as stern institutions clinging to　their treasured traditions. That image is now being revised. Swiss bankers arc facing hard times, and billions of dollars have been leaking out of their coffers. It is not just that there are too many banks. New international regulations designed to crack down on money laundering and terrorist funding have made banking in Switzerland more expensive, At the same time, other European governments are demanding that the Swiss disclose the holdings of non-Swiss clients. In fact, the EU and the   
　　Swiss government are nearing completion of an agreement which demands that banks withhold taxes on the interest income of EU citizens. The Swiss seem amenable to these changes because they fear the EU could make even more draconian demands, such as dropping Switzerland's treasured banking-secrecy laws. These laws have enabled Swiss banks to court clients with promises that information about them won't be disclosed, as long as their wealth hasn't been acquired illegally.
    International competition has also been accelerating. Major
American financial institutions are luring European investors with a more diversified menu of investment choices. Offshore havens have also been turning up the heat. Some analysts predict that Singapore may soon replace Luxembourg as the world's second-largest offshore banking center, foreshadowing a shift away from Europe. “International financial centers are engaged in a no-holds-barred struggle to create the most favorable conditions,” says Urs Roth of the Swiss Bankers Association.
    All this comes at a time when the world is facing increased economic turmoil. These setbacks have cost Swiss banks plenty, with the total of international accounts falling from $2.6 trillion to $2.2 trillion in just one year. The world economy has certainly played a role, but the Swiss worry that increasing regulation and the resulting increase in administrative costs will take an even bigger bite out of their market share. Small banks are particularly hard-hit, since they lack the resources to keep up with today's rapidly changing regulations and technology.
   Swiss banks should not be dismissed, however. Larger Swiss banks have responded to hard times by offering a broader array of investment options and by opening overseas branches to reach out to more clients.
   “Singapore is one of the growth markets in private banking,” says Martin Somogyi of Credit Suisse, which has made the island nation its largest private banking hub outside of Switzerland. Moreover, Switzerland still remains the leading international money manager, its vaults holding about one-third of all offshore money. Many clients are more concerned about preserving their wealth than risking it for further gain, and the Swiss are known to be particularly averse to risk, a trait that has rewarded them during economic downturns, In addition, the country has a centuries-long history of political and financial stability, which appeals to many in this age of growing international tension. Overall, it seems likely that the Swiss will be able to preserve their rock-solid reputation for a long time to come.