Industry, government react to UBS' U.S. tax deal

(Reuters) - UBS AG, the world's largest wealth manager in terms of assets, agreed to pay a $780 million fine and disclose information about some of its clients to settle a landmark U.S. tax case.

The case has been closely watched by the entire offshore banking industry.

Following are a selection of opinions on the agreement.

FINANCE MINISTER HANS-RUDOLF MERZ

"It became evident that if the American authorities would bring UBS to an indictment (that) .... would have also been falling on our economy."

"It is evident there has been tax fraud (at UBS)."

"Bank secrecy will stay."

SWISS BANKING REGULATOR FINMA

"FINMA welcomes the settlement reached between UBS and the U.S. authorities thereby avoiding the looming threat of formal criminal charges being filed against the bank in the USA. In order to avert the drastic consequences such charges would have for UBS and the stability of the Swiss financial system, FINMA has ordered that a limited quantity of client data be handed over to the U.S. authorities immediately.

"FINMA is also publishing the results of the investigation carried out by the Swiss Federal Banking Commission (SFBC) ... The SFBC ruling reprimands UBS for a severe breach of certain provisions of the Swiss Banking Act by individual staff members and serious shortcomings in dealing with the legal risks associated with its business with U.S. clients."

PIERRE MIRABAUD, PRESIDENT OF SWISS BANKERS' ASSOCIATION

Mirabaud, from a prominent Geneva private banking family, regretted that the United States did not respect the existing bilateral treaty which lays down administrative procedures.

The United States, a "friend" of Switzerland, had signed clear agreements on administrative assistance and a double taxation treaty, Mirabaud told Radio Suisse Romande. Washington should have awaited the appeals being heard by the Swiss administrative tribunal.

SWISS BUSINESS GROUP ECONOMIESUISSE

"Switzerland has a strong interest in an orderly financial center and a tough financial market supervisor. However, the agreement between UBS and the U.S. department of justice raises serious questions about the rule of law."

"It is irritating that among friendly states the legal ways are bypassed by the U.S."

HELVEA ANALYST PETER THORNE

"It is good news that the case has been settled and the cost of 913 million Swiss francs is less than the 2 billion francs we feared. The bank has already announced the closure of the U.S. business causing the fine and the creation of a completely separate U.S. business. It remains to be seen if there will be any management changes as a result of this settlement."

NEWSPAPER TRIBUNE DE GENEVE

"The United States has clearly won the first set, as Switzerland appears to have accepted to deliver the names of 250 American clients of UBS. A breach of the sacrosanct bank secrecy? One could play with words and suggest that those sacrificed were guilty of fiscal fraud and not tax evasion, which is not an infraction under Swiss law.

HANS GEIGER, FORMER DIRECTOR OF ZURICH UNIVERSITY'S SWISS INSTITUTE OF BANKING AND FINANCE

Geiger told Geneva-based World Radio Switzerland that he was "very surprised, badly surprised" by the settlement.

Geiger said that there were two issues: "If there is an issue between the bank and the American tax authorities, let's say a financial one, then that's up to the bank and the American authorities to settle that.

"But the other one is the issue of banking secrecy, or the protection of the financial privacy of the clients of a Swiss bank."

VONTOBEL ANALYST TERESA NIELSEN

"The settlement in the US tax case is what we have been waiting for. It is very positive for UBS to have closed off the case now as it will enable them to move forwards again and to start to build up their reputation.

"The fine of $780 million is less than we had previously booked into our numbers (1 billion Swiss francs) ...

"We are in the process of reviewing our estimates, price target is under review but we confirm our Buy rating."

(Reporting by Sam Cage in Zurich and Stephanie Nebehay in Geneva; editing by John Stonestreet)