Liechtenstein bank stows extra $33 million for imminent U.S. tax deal

ZURICH Thu Jul 18, 2013 8:58am EDT

ZURICH (Reuters) - Liechtenstein's second-largest bank LLB is close to a settlement with U.S. prosecutors investigating tax evasion and has set aside an additional 31 million Swiss francs ($33 million) of provisions, it said on Thursday.

LLB would become the third European bank, after Switzerland's UBS and Wegelin, to settle with U.S. authorities clamping down on offshore banks they accuse of helping wealthy Americans to avoid paying tax.

The tiny European principality of Liechtenstein has been quicker than Switzerland to succumb to pressure on its banking secrecy laws, but its banks have struggled with the resulting drop in client assets.

Liechtensteinische Landesbank, or LLB, said it is confident a solution with U.S. authorities could be found in the coming weeks. The bank's provisions for the U.S. tax dispute now total 47 million francs.

"It's now a case of clarifying final details and finishing negotiations with the U.S. authorities," LLB spokesman Cyrill Sele said.

The Swiss arm of LLB, which is closing, would be excluded from this solution, Sele added.

LLB's Swiss arm is one of more than a dozen banks in Switzerland under formal investigation by the United States, including Credit Suisse, Julius Baer, the Swiss arm of Britain's HSBC, privately held Pictet and local government-backed Zuercher Kantonalbank and Basler Kantonalbank.

Swiss banks will be allowed to cooperate with U.S. authorities under a government plan agreed this month in an attempt to help its banks avoid criminal charges.

The U.S. investigation has put the brakes on LLB's planned sale of swisspartners, a wealth manager that specializes in structuring funds to minimize tax payments.

LLB announced in March that it was cutting nearly a quarter of its staff and expected a restructuring charge of 7 million francs as a result of the closure of its Swiss arm.

The provisions, along with other costs, will drag down the bank's profit by nearly 80 percent to 14 million francs when it releases audited first-half figures on August 29, LLB said.

"The implementation of strategic initiatives is on track, though it has led to certain extraordinary costs," analysts at Zuercher Kantonalbank said. "In terms of operation, LLB is doing better than we had previously expected."

(Reporting by Alice Baghdjian and Oliver Hirt; Editing by David Goodman)

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