Something isn’t right here. $1,700 in interest on 3 million is less that .1% (less than a tenth of a percent). They wouldn’t stay in business of this is all they made for their private banking customers.
Maybe he closed this account early in the year. Swiss banks are closing out their US client accounts because of the new US regulations, but I believe the closing of US accounts happened later in the year, not the beginning of last year.
Actually, it is quite possible. Central banks have set interest rates at much less than 1% for a while now. Swiss Franc rates are very small, just like USD rates.
The bigger question is why he had a Swiss bank account just to ostensibly get foreign currency exposure. You don’t have to open an account in Switzerland just to own Swiss Francs (I used to trade foreign exchange for a hedge fund). And there would be no reason to just leave it there earning essentially nothing. If you open a foreign account, more likely it would be for investing in foreign stocks or bonds.