UPDATE 3-Swiss parliament stalls progress of U.S. tax deal
* Lower house votes against debate
* Government warns of pending U.S. indictments
* Bern scrambles to limit potential damage if bill rejected
* More than a dozen banks under investigation
* Bill referred back to upper house for debate, vote
By Katharina Bart
ZURICH, June 18 (Reuters) - Switzerland's lower house of parliament has stalled a government bid to protect the country's banks from criminal charges in the United States for helping wealthy Americans to evade tax.
The lawmakers refused to address a bill aimed at allowing banks to sidestep strict Swiss secrecy laws by disclosing their U.S. dealings with prosecutors, helping them to strike deals expected to include fines that could cost the industry as much as $10 billion.
Banks will not be allowed to hand over client names, but the proposal would give them a one-year window to hand over information including names of third parties such as accountants and tax lawyers, which should be sufficient for U.S. officials to identify tax dodgers.
The lower house voted by a large majority not to discuss the legislation, referring it back to the upper house. The move means the draft law is increasingly unlikely to be fast-tracked before the end of parliament's summer session on Friday.
A committee of lawmakers from the upper house, set to address the bill again on Wednesday, issued a statement acknowledging the situation's urgency and saying they were in favour of Swiss banks making amends for wrong-doing.
Swiss economy minister Johann Schneider-Ammann told Swiss radio SRF: "Everybody, from left to right, from the government to parliament, is making efforts and we will find a solution." He said it was important to convey this message to the United States.
The protection of client information has helped to make Switzerland the world's biggest offshore financial centre, with $2 trillion in assets. But that haven has come under fire as other countries have sought to plug budget deficits by clamping down on tax evasion, with authorities probing Swiss banks in Germany and France as well as the United States.
Swiss parliament's lower house may be given a second chance to debate the law before the weekend, but a second refusal to address the bill this week would kill it and raise the prospect of the United States indicting banks.
Finance Minister Eveline Widmer-Schlumpf told lawmakers of her fears for Swiss banks, which contribute about 6 percent of the Alpine nation's gross domestic product.
"There is a very real danger of an escalation," she said. "Criminal charges are planned. Do you really want to prevent our financial centre and our economy from returning to the stability it so urgently needs?"
U.S. authorities have more than a dozen banks under formal investigation, including Credit Suisse, Julius Baer , the Swiss arm of Britain's HSBC, privately held Pictet in Geneva and local government-backed Zuercher Kantonalbank and Basler Kantonalbank.
Many Swiss lawmakers bristled at pressure from the United States to pass the legislation quickly, with Christoph Blocher, a former minister from the right-wing Swiss People's Party, accusing the bill's supporters of fearmongering.
"They don't have arguments for it, they are simply scared," Blocher told parliament.
An indictment, seen as the death knell for virtually any business, felled Wegelin & Co this year. The bank paid a $58 million fine and closed its doors for good after pleading guilty to helping wealthy Americans evade taxes through secret accounts.
If parliament kills the bill, the Swiss government could still take matters into its own hands and approve the data transfer with an executive order, though circumventing a hostile parliament is seen as a gamble.
Switzerland's biggest bank, UBS, was forced in 2009 to pay a fine of $780 million and deliver the names of more than 4,000 clients to avoid indictment, giving the U.S. authorities information that allowed them to pursue other banks.
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