UBS CEO sees politicians backing U.S. tax deal

Chief Executive Oswald Gruebel of Swiss bank UBS addresses an annual news conference in Zurich in this February 9, 2010 file photo.

VIENNA (Reuters) - UBS chief executive Oswald Gruebel expects Swiss parliamentarians to back a tax deal that would draw a line under a legal dispute that has threatened to bring the bank to its knees.

The Swiss lower house rejected the deal on Tuesday, triggering a new parliamentary debate next week and delaying a final decision on whether to allow the government to hand over 4,450 UBS client accounts to U.S. authorities.

When asked by reporters on the sidelines of a banking event whether the Swiss parliament would back the deal, Gruebel said: "I am confident it will approve it because it is about a contract between the U.S. and Switzerland, not with UBS."

UBS has already handed over the data to Swiss authorities for processing, as required by the United States under the agreement. "We had to fulfill certain obligations which we have done, so it's now up to Switzerland and the U.S.," Gruebel said.

Tuesday's snub by the main arm of parliament came after a vote in favor of the deal by the upper house last week, meaning the two houses will have to try and agree a common text by the end of next week.

Even if Swiss politicians support the deal, they could still put it to a referendum, a scenario the lower house supported on Tuesday. That would delay the handover of data beyond the August deadline even if Swiss voters were in favor.

The U.S. government agreed last year to drop tax evasion charges against UBS after Switzerland promised it would transfer by this August the details of clients UBS helped to dodge taxes, a move that would breach existing bank secrecy laws.

A Swiss court in January duly blocked the data transfer, forcing the government to move to bypass that ruling with a legal patch that requires parliamentary approval by both houses.

(Reporting by Ed Taylor; Writing by Jason Rhodes; Editing by Dan Lalor)