UBS avoids US tax fine, will expose clients
STRICKEN Swiss bank UBS will walk away from its epic fight with the US tax authorities without paying a fine, in a deal designed to head off a diplomatic crisis between the two nations, it emerged yesterday.
But UBS is to hand over details of 5,000 rich American clients who may have evaded taxes to the US authorities, in a move that could jeopardise the centuries-old Swiss tradition of absolute banking secrecy.
The bank, which has suffered catastrophic losses in the credit crunch, is expected to announce on Friday that it has avoided having to pay a potentially terminal fine to the US. It also hopes to announce that the court trial against it is set to be called off.
Under the settlement, said to be an “agreement in principle”, UBS is likely to reveal far fewer than the 52,000 client names the US had been pushing for, but would include the biggest accounts, US government sources were saying yesterday.
Switzerland’s top diplomat Michael Ambuehl told Swiss newspaper NZZ am Sonntag yesterday the deal would not violate Swiss law.
“The Swiss legal system is maintained, because the US have promised to act on the basis of the current agreements and to ask for legal assistance again,” said Ambuehl, who is state secretary in the foreign ministry.
UBS, which is struggling to recover from the subprime crisis after posting the biggest annual loss in Swiss corporate history last year, agreed in February to pay $780m (£467m) to settle separate but related criminal tax fraud charges.
The bank will report second-quarter results tomorrow and analysts expect a 1.1bn Swiss francs (£616m) loss.