Banking on the Swiss

For London's bankers, it's the final insult. First, the government announces that it's hiking the top rate of income tax by 10 points. Then, this week, it slaps a windfall tax on any annual bonus this year of more than $40,000—a trivial figure for top earners. Enough. In the words of one 50-something banker: "For London, the game is over. The super-rich are off already."

Their favored destination? It has to be Switzerland, the country routinely depicted as banker heaven. Real-estate and relocation agents report a quickening stream of inquiries from businesses and individuals looking to escape to a friendly regime outside the reach of the British government, beyond the frontiers of the meddlesome European Union (Switzerland is not a member), and yet still rich in First World comforts. "What we are hearing is more talk about moving to a more benign regime, and Switzerland ticks many of the boxes," says Jeremy Rollason, who sells property in Switzerland for Savills, an upscale British real-estate firm.

Switzerland is an easy sell to stressed Londoners. The air is clean, the nearest ski slope is a 45-minute hop from downtown Zurich or Geneva, and—most unlike London—public transport runs with dreamlike efficiency. "Switzerland is hardly a hardship posting," says James Nason of the Swiss Bankers Association.

Just as important, the natives aren't hostile. A banking center since the 16th century, Switzerland has few of the hangups about extreme moneymaking that make life tricky for the London banker these days. (Five percent of the Swiss population work in financial services, compared with roughly 3 percent in the U.K.) Sure, the big Swiss banks have goofed, too, but there are fewer fulminating politicians and raucous legislative retributions. This is the tranquil country that gave the world Valium and milk chocolate.

And unlike Britain, the taxman is friendly—at least to the incoming rich—and ready to strike a deal to attract the relocating banker. Today, the country's semiautonomous cantons are in a race to the bottom on rates. Plenty of hedge funds from Britain have already found new homes in Switzerland, clustered in the hills above Zurich.

But paradise can be trying—or just plain dull. Start with the wholesome lifestyle. The roistering after-hours fun that the London banker expects may be hard to find in the home of Calvinism, where restaurants like to close long before midnight and shops stay shut on Sundays.

Besides, wine prices are among the highest in Europe. (Bankers with tastes formed in London will want to stay away from Switzerland's homegrown wines.) Swiss menus have a wearying sameness, as well as a tendency to clog the aorta. Rösti, the standard national dish that resembles a cake of hash browns, features on no stressed banker's diet plan. Geneva and Zurich ranked fourth and sixth, respectively, on the 2009 list of the world's most expensive cities compiled by Mercer, a human-resources consultancy.

Don't expect the freewheeling, tolerant "world city" manners of London or New York, either. Every expat has war stories to tell of dealings with the Swiss bureaucracy, in particular the Fremdenpolizei (or Aliens Police). To leave your trash out on the wrong day is to invite a visit from the authorities. This is Europe's version of Singapore.

In fact, the foreigners who make up 20 percent of the 7.6 million population are accepted as the necessary price of prosperity rather than welcome guests. A thicket of restrictions deters all but the very richest outsiders from buying homes. Not that the prices are tempting anyhow. "You are going to get more for your money in Geneva than in London—but not radically more," says Rollason.

Nor will a command of German automatically mean easy intimacy with the locals. The language of "German-speaking" Switzerland is Schwyzerdütsch, a variant that even native Germans find hard to follow. To complicate matters, almost every major canton takes pride in its own baffling dialect.

And if the rich Londoners are still tempted to decamp? Remember that both of Switzerland's two big banks, Credit Suisse and UBS, chose to base their international investment businesses in the City, London's financial district. One good reason has to be that the moneymaking crowd simply prefers to be in Britain. Whatever the cost.