Credit Suisse Group AG (CSGN), the second- biggest Swiss bank, is working to resolve a criminal investigation in the U.S. over alleged tax evasion by some clients, Chief Executive Officer Brady Dougan said.
“These are issues that we take very seriously,” Dougan said in a Bloomberg Television interview today. “Clearly we’re going to do everything we can to try to get to a resolution of these matters as quickly and as cleanly as possible.”
The bank said this month that it’s a target of a criminal investigation by the Department of Justice over former cross- border private-banking services to U.S. customers. Eight bankers, including Credit Suisse’s former head of North America offshore banking, were charged with conspiring to help U.S. clients evade taxes through secret bank accounts.
The bank said it’s been conducting an internal investigation and is cooperating with the U.S. authorities “subject to Swiss legal obligations.”
In 2008, U.S. prosecutors conducted a probe into whether UBS AG (UBSN), Switzerland’s biggest bank, helped Americans evade taxes. In February 2009, UBS avoided criminal prosecution by paying $780 million, admitting it fostered tax evasion, and giving the U.S. Internal Revenue Service data on more than 250 accounts to avoid criminal prosecution. It later turned over data on another 4,450 accounts, and, in October, the U.S. dropped its criminal case against UBS.
Dougan said it’s not “appropriate to speculate” how Credit Suisse may resolve the investigation. “There are obviously not just Credit Suisse issues, there are broader industry implications and there are also government-to- government issues there as well,” he said.
The bank, in its quarterly report, said it understands that certain U.S. authorities are also investigating other Swiss and non-U.S. financial institutions. The Swiss government is in talks with authorities in the U.S. to resolve the issue of untaxed assets held by Americans in Swiss bank accounts, a government official said last month.
Credit Suisse also said today that Hans-Ulrich Meister will become CEO of private banking on Aug. 1, adding to his role as head of Switzerland. Walter Berchtold, the current CEO, will become chairman of private banking. The management change isn’t related to the U.S. probe, Dougan said.
“In fact, I think Walter has done probably more than just about anybody to build out a completely compliant platform, to build our onshore business,” Dougan said. “We clearly do have, I think, a state-of-the-art compliant platform. Obviously that doesn’t mean that we haven’t had issues in the past. And it doesn’t mean that we in all cases do exactly the right thing now with every individual.”
In the fall of 2008, when the bank began closing its cross- border business with U.S. clients, it had “thousands” of accounts with $3 billion in assets not declared to the U.S. Internal Revenue Service, according to the indictment of bankers in February. The Justice Department said “conspiracy dates back to 1953 and involved two generations of U.S. tax evaders including U.S. customers who inherited secret accounts.”
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