Italy may bar Swiss banks from selling to retail clients -Swiss diplomat

BERN Mon Feb 17, 2014 12:41pm EST

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BERN Feb 17 (Reuters) - Swiss banks risk being banned from selling financial products to retail customers in Italy after Swiss voters backed plans to limit immigration from the European Union, Switzerland's top tax diplomat said on Monday.

Swiss relations with the EU were sent into a tailspin by the referendum this month. Such an Italian ban would be the most tangible example yet of how the poll result could jeopardise Switzerland's market access to the bloc.

Italian officials made clear that they would block Swiss banks from selling retail products to Italian clients unless Switzerland ensures the free movement of people between the two countries, according to Swiss diplomat Jacques de Watteville.

The Italian finance ministry was not immediately available to comment.

Swiss banks sell a variety of services into EU countries aimed at wealthy clients, such as mutual funds and structured products, but typically do not engage in high-street retail banking such as mortgage lending outside Switzerland.

The warning by Italian officials was delivered to Swiss representatives in Italy last week, said de Watteville, Switzerland's state secretary for international financial and tax matters.

"We have to find a solution to overcome this obstacle," he told a media conference in Bern on Monday.

Market access for Switzerland and its banks represents key leverage that EU states have over Switzerland. The 28-member bloc said overnight it has postponed negotiations with Switzerland on its participation in multibillion-dollar research and educational schemes.

Italy appears to be making use of a provision that was left up to individual EU member states when the bloc reached a deal over broad reform of securities markets last month: regulating access to retail clients by non-members.

The Swiss government has up to three years to translate the referendum vote into law.

De Watteville's comments come as Bern and Rome continue long-running negotiations aimed at disclosing Italian savers' secret holdings in Swiss banks, flagged for conclusion by May. (Additional reporting by Giuseppe Fonte in Rome; Editing by Pravin Char)

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