ZURICH (Reuters) - Switzerland’s Leodan Privatbank AG will shut down after failing to build up the necessary size to survive in a tougher regulatory environment, it said on Tuesday.
Zurich-based Leodan on Monday reached a $500,000 settlement with the U.S. Department of Justice (DOJ) to avoid possible prosecution for helping Americans evade taxes.
“We’ve decided to end operations,” a bank spokesman said. “The U.S. loss didn’t have any influence on the decision. We are too small to be independent.”
The spokesman added that Leodan, which he said managed around 500 million Swiss francs ($492.32 million) in client assets, was in advanced negotiations with a “mid-sized” Swiss private bank about transferring clients and the majority of its employees.
Smaller Swiss banks, which for years benefited from clients bringing money to Switzerland to take advantage of bank secrecy rules, are struggling due to a global clampdown on tax evasion and costly regulation.
Consultancy KPMG last year predicted that the number of Swiss private banks would fall to fewer than 100 in the next three years from around 130.
Leodan became the 77th Swiss bank to find a settlement in the U.S. program, which was launched in 2013 and allows banks to resolve potential criminal liabilities in the United States.
Roughly one hundred Swiss banks signed up to the DOJ program.
BSI, which is owned by Brazil’s Grupo BTG Pactual SA, was the first bank to reach a settlement in the program, agreeing to pay $211 million in March.
Reporting by Joshua Franklin and Ruppert Pretterklieber; editing by Jason Neely
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