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Swiss President and Finance Minister Hans-Rudolf Merz (C) and Swiss Foreign Minister Micheline Calmy-Rey - Source: Reuters -
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Switzerland will hand over details of about 4,450 UBS AG bank
accounts to US authorities, settling a tax dispute that has
threatened Swiss banking secrecy, the two governments said.
The Swiss government has also agreed to review and process requests
by the United States seeking information from Swiss banks besides
UBS about account holders who may have tried to evade US taxes, the
US government said.
"This announcement today should send a signal - no matter what
institution you're with, the IRS is willing to pursue both the
institution and the individual," Internal Revenue Service
commissioner Doug Shulman told reporters.
Shulman said the accounts were at one time worth $US18 billion, but
he could not provide a current figure.
The agreement ends a dispute that has strained relations between
the United States and Switzerland and challenged the latter's
jealously guarded bank secrecy laws.
It could help UBS, the world's second-largest wealth manager,
restore an image that has been battered by the financial crisis and
the US dispute, and may open the way for the Swiss government to
sell its stake in UBS.
"It's good to get this out of the way but the confidence of a lot
of clients has been compromised so I'm not sure we will see inflows
return in Q3. It will take time to recover reputation from this,"
said Jaap Meijer, an analyst at Evolution Securities in
London.
Switzerland's Finance Minister Hans-Rudolf Merz said the government
wants to sell its stake as quickly as possible and while it would
be good business, it also has to consider other factors.
UBS shares were down one percent at 16.74 Swiss francs, having
reversed some of their earlier losses.
Swiss rival Credit Suisse was down 1.3% and Julius Baer dropped
0.7%.
UBS Chairman Kaspar Villiger said the agreement helps resolve one
of UBS' most pressing issues.
"I am confident that the agreement will allow the bank to
continue moving forward to rebuild its reputation through solid
performance and client service."
New treaty
The new treaty between the United States and Switzerland would
allow action in the case of tax fraud and the like in the UBS case,
the Swiss government said.
Precise details will be published 90 days after the agreement
comes into force.
The US government retains the right to go back and use a summons to
collect the names, which roughly equal the number of accounts, if
the enforcement process fails, Shulman said.
The client accounts to be disclosed will likely belong to people
suspected of committing tax fraud under the terms of a double
taxation agreement that obliges Switzerland to provide help if
Washington seeks it in a criminal investigation.
Shulman would not comment on whether the IRS has any open probes of
other banks.
"The IRS is now gaining institutional skill and knowledge in how to
pursue these types of cases and they're going to use that. This is,
I believe, the beginning and not the end," said Peter Hardy, a
former federal prosecutor and specialist in white-collar crime at
Post & Schell in Philadelphia.
