Switzerland is nearing a solution with the U.S. on tax matters, said Patrick Odier, chairman of the Swiss Bankers Association, after Wegelin & Co. was forced to sell its business under pressure from the U.S. investigation.
“We’re looking at a global solution and it’s being worked on heavily,” Odier said today in an interview at the World Economic Forum in Davos, Switzerland. “It’s important to solve the issue, and sooner rather than later.”
Wegelin, the 270-year-old Swiss private bank, today agreed to a sale to Switzerland’s Raiffeisen Group after three of its bankers were charged earlier this month with conspiring to help American clients hide more than $1.2 billion from U.S. tax authorities. The indictment came amid U.S.-Swiss talks to resolve a U.S. probe into offshore tax evasion. Officials are seeking to reach a settlement with Swiss banks and resolve criminal probes of 11 of them, including Wegelin.
Odier said he has no reason to think that other private banks may follow the path of Wegelin.
“In general, it’s regrettable that the oldest private bank of Switzerland has to be confronted with the only solution to sell itself to preserve the interests of its clients,” Odier said. “It shows there’s a need for a joint solution with the U.S. Each situation is different.”
Switzerland and the U.S. aim to conclude talks on the tax matters by the end of the year, Swiss Finance Minister Eveline Widmer-Schlumpf told reporters yesterday in Davos after a meeting with her U.S. counterpart, Timothy Geithner.
Tax agreements, similar to the ones reached with Germany and the U.K., that would force clients to either declare assets or pay taxes through the banks, are “the right and only way to go at this point,” Odier said.
“We have to fight abuses” of banking secrecy, he said. “The concept of financial privacy is to protect assets and not to hide them.”
The tax issues are adding to the pressure on Swiss banks as profit margins shrink because costs are rising. “The cost in general in the financial industry has been pushed toward higher levels due to the combination of many, many regulations that are partially justified and sometimes exaggerated,” Odier said.
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