Three more Swiss banks join U.S. tax deal

ZURICH Wed Dec 11, 2013 10:18am EST

Stylized Swiss and U.S. (R) national flags fly on a roundabout in the town of Obersiggenthal near Zurich May 28, 2013. REUTERS/Arnd Wiegmann

Stylized Swiss and U.S. (R) national flags fly on a roundabout in the town of Obersiggenthal near Zurich May 28, 2013.

Credit: Reuters/Arnd Wiegmann

ZURICH (Reuters) - Three more Swiss banks said they would work with U.S. officials in a crackdown on wealthy Americans evading taxes through hidden offshore accounts, a trickle that could rise to about one third of the country's private banks.

The number that participate in the government-brokered scheme is important for larger banks facing criminal investigations in the United States, such as Credit Suisse, Julius Baer and Pictet & Cie.

These banks' talks with U.S. justice officials to settle their cases have been frozen pending a solution for the wider Swiss banking sector.

If the U.S. deems its deal with Switzerland a failure because too few banks come forward to make amends for aiding tax evasion, it is likely to hold up settlements for the larger banks.

The deal for second-tier banks, agreed in August, is part of a U.S. drive to lift the veil of Swiss bank secrecy which in 2009 led to UBS paying $780 million in a settlement where the bank agreed to hand over U.S. client names with secret Swiss accounts.

Bank Coop, Migros Bank, and Linth Bank said on Tuesday they would participate in the U.S. scheme.

They join Valiant Holding and Berner Kantonalbank, two mainly retail banks, that have also said they would take part. Zurich-based private bank and securities firm Vontobel Holding AG is also participating, but has put itself in a category of institutions that have not committed any U.S. tax-related offences and are therefore exempt from penalty payments.

Banks had until Monday to inform the Swiss regulator of their intentions.

Peter V. Kunz, professor of business law at Berne University, told Reuters on Tuesday he thought about 100 of the country's 300-plus private banks would participate.

The vast majority of Switzerland's private banks such as Geneva-based Lombard Odier & Cie are not listed on the stock market, meaning they are under no obligation to publicly disclose how they plan to deal with the U.S. tax crackdown.

Eleven listed banks, such as private banks EFG International and VP Bank and a host of small, largely retail players including local government-backed cantonal banks, have yet to tell shareholders what they intend to do.

TOO RISKY

The U.S. scheme, which lapses at the year-end, requires banks to hand over some previously hidden information and face penalties of up to 50 percent of assets they managed on behalf of wealthy Americans. If the banks shun the offer, individual firms and senior staff risk criminal prosecution.

Coop, majority-owned by Basler Kantonalbank which is among the banks in the crosshairs of U.S. prosecutors, said staying out of the program was too risky.

Coop took a 9 million Swiss franc ($10.14 million) provision and said it had only a few customers who were based in the United States, whose assets amounted to less than 0.3 percent of its total.

Migros said it was coming forward following comments from the Swiss regulator, which told banks they should err on the side of caution in judging their dealings with American clients.

Linth said it is entering the program in an effort to bring the matter to a swift conclusion.

($1 = 0.8874 Swiss francs)

(Reporting by Caroline Copley and Katharina Bart; Editing by Erica Billingham)

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Comments (3)
CitizenAbroad wrote:
Coop Bank and Migros Bank are retail banks belonging to the Swiss supermarket chains, Coop and Migros. These chains offer banking services, often from branches in or near their supermarkets, where ordinary residents of Switzerland bank, including Americans resident there. Coop reported that less than 0.3% of its bank accounts might belong to US Persons and Migros reported 375 of 825’000 customers could belong to US Persons (0.04%). There are approx. 15’000 to 30’000 US Persons resident in Switzerland out of a population of 8 million, or 0.3% to 0.4% of residents in Switzerland are US Persons.

It can be expected that most Swiss retail banks will have at least one American account holder living in Switzerland, causing the bank to be classified as a category 2, although the bank did not actively promote its accounts to Americans. The US program fails to distinguish between Swiss banks that actively promoted banking services to Americans living in the US for purposes of tax evasion and Americans living and working in Switzerland who opened a basic bank account for transaction and savings purposes. The US program reflects poorly on its designers and its chief promoter, Assistant Attorney General, Kathryn Keneally.

Dec 11, 2013 9:38am EST  --  Report as abuse
Imabroad wrote:
You miss the fact that banks that were not active in soliciting customers for the purposes of tax evasion are being forced to accept culpability because they cannot say with certainty that they don’t have Swiss resident American taxpayers as customers, and that those customers are completely US tax compliant. Millions of US persons living abroad and their local banks are only becoming aware of the US’s unique taxation laws that require US citizens and green card holders to pay tax on income earned while resident of another country. Not only are these banks being penalized, they are in turn freezing the accounts of American emigrants and even of those who’ve never lived in the US! This is a complete travesty of justice.

Dec 11, 2013 11:24am EST  --  Report as abuse
SwissTechie wrote:
I don’t know why you call this a “deal”. It has much more to do with blackmail, bullying and economic warfare.

How can a bank with near no US indica “come forward to make amends for aiding tax evasion” when they have no such clients to aid such tax evasion with and were never active in the US market? I’m having trouble connecting the dots here.

This article is just as fishy as the “deal” that was never a deal.

Dec 11, 2013 3:36pm EST  --  Report as abuse
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