Swiss Banks Agree To US Tax Deal
11 December 2013
Posted by: Author: Fin24
Zurich - The first Swiss banks have signalled their readiness to
work with US officials in a crackdown on wealthy Americans evading taxes
and many more are expected to follow in the coming weeks, in the latest
blow to Switzerland's cherished bank secrecy.
The deal between
the United States and Switzerland, agreed in August, is part of a US
drive to lift the veil of Swiss bank secrecy. In 2009, this led to UBS
paying $780m in a settlement where the bank agreed to hand over US
client names with secret Swiss accounts.
The US pursuit of tax
dollars sheltered in offshore accounts has piled pressure on
Switzerland, the world's largest offshore finance centre with more than
$2 trillion in assets.
The Swiss government in June bowed to
repeated attacks on banking secrecy, deeply embedded in the country's
culture, and will share data on foreign depositors if a global standard
Under this latest US deal, Swiss banks were given
until Monday by their regulator to say whether they would take part in
the government-brokered programme open to a host of second-tier Swiss
The programme, which lapses at year-end, requires the banks
to hand out some previously hidden information and face penalties of up
to 50% of assets they managed on behalf of wealthy Americans. If the
banks shun the US offer, individual firms and senior staff risk criminal
The regulator FINMA said on Tuesday that most had
done so, and that it expected several more to do so shortly, without
disclosing what the banks had decided.
Valiant Holding and Berner
Kantonalbank, two mainly retail banks, said they would come clean on any
past transgressions and face up to fines.
The fines are scaled to
reflect how egregiously the banks acted in their dealings with U.S.
customers. Fines would have to be disclosed to investors because they
could have an impact on share prices.
A third -- Zurich-based
private bank and securities firm Vontobel Holding AG - said it would
also participate. But it put itself in a category of institutions that
have not committed any US tax-related offences and are therefore exempt
from penalty payments.
The bank began transferring business with
wealthy Americans into an entity registered with the Securities and
Exchange Commission in 2008, when the crackdown on Switzerland's banks
How many of Switzerland's 300-plus private banks come
forward under the programme is also key for banks facing criminal
investigations, which includes some of Switzerland's biggest banks such
as Credit Suisse and Julius Baer and Pictet & Cie.
A host of
listed private banks such as EFG International and Banque Cantonale de
Geneve said they had yet to make a decision. St. Galler Kantonalbank,
which owns private bank Hyposwiss, said it had informed the Swiss
regulator of intention, but would only tell investors what it had
decided when it had been formalised by its board.
publicly-listed banks, which are subject to disclosure rules, give the
first indication of how many firms will cooperate with the US
authorities under the plan.
But most of Switzerland's private banks are not listed and under no obligation to make their decision public.
player Lombard Odier & Cie said it is still evaluating what to do.
Others such as J. Safra Sarasin, Union Bancaire Privee and Mirabaud did
not respond to request for comment on Tuesday.
A legal expert said
FINMA's Monday deadline was merely intended to take the temperature of
Swiss banks' intentions, and that they have three more weeks until the
legally-binding deadline to take up the deal lapses.
roughly 100 banks will end up coming forward - the coming weeks will
show how many succumb to the pressure," Peter V. Kunz, professor of
business law at Berne University, said.
A failure to cooperate
could also hold up a settlement for Credit Suisse, Julius Baer, Pictet,
and local government-backed Zuercher Kantonalbank (ZKB), which have seen
settlement talks with US justice officials frozen pending a solution
for the wider industry.
This article first appeared in fin24.com.