BERN/ZURICH, June 13 (Reuters) - A Swiss parliamentary committee said on Thursday that lower house lawmakers should decline to debate a bill which would allow banks to sidestep strict secrecy laws and pass information to U.S. authorities.
Switzerland has built the world's biggest offshore financial centre, with more than $2 trillion in assets, on the back of its confidentiality laws, but has come under fire since the financial crisis as struggling economies elsewhere seek to plug budget gaps by clamping down on tax evasion.
If the lower house were to follow the recommendation not to debate the draft law, or if they reject it next week, it would severely limit Switzerland's options to free its banks from the threat of criminal action from the United States.
The committee's recommendation was delivered after hours of debate behind closed doors, with no reasons publicly given.
The lower chamber will have to reject the recommendation if it is to proceed with the debate, as the Swiss government seeks a way to draw a line under a protracted tax dispute with Washington. While it is unusual for lawmakers to reject a parliamentary committee recommendation, it is not unknown.
On Wednesday, members of Switzerland's upper chamber voted 24 to 15 to pass the bill.
The draft law would let banks avert criminal prosecution by handing over information and striking deals with U.S. prosecutors, which one lawmaker earlier this week called a "choice between the plague and cholera". The banks are still expected to face heavy fines that could cost them a total of up to $10 billion.
While banks would not be allowed to hand over client names, the proposal would allow them to pass enough other information to allow U.S. authorities to identify them.
U.S. prosecutors 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.
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 Swiss banks.
Wegelin, Switzerland's oldest bank, shut its doors earlier this year and paid $58 million to U.S. authorities after pleading guilty to helping wealthy Americans evade taxes through secret accounts.