Basler Kantonalbank, one of at least 12 banks being probed by the U.S. for allegedly helping Americans dodge taxes, was downgraded by Standard & Poor’s, which cited the risk of a “material” one-time legal cost.
S&P lowered its senior unsecured debt rating on the third-largest of Switzerland’s 24 regional banks to AA from AA+, the New York-based firm said in an e-mailed statement today.
“We foresee ongoing elevated reputational and legal risk at BKB from pending legal actions by the U.S. Department of Justice against Swiss banks,” S&P said after meeting with the management of the company. “We have factored into our assessments a material one-time legal cost for BKB.”
The Department of Justice is investigating banks, including Credit Suisse Group AG and Julius Baer Group Ltd., after last year indicting Wegelin & Co. UBS AG, Switzerland’s largest bank, avoided prosecution in 2009 by paying $780 million, admitting it aided U.S. tax evasion and handing over data on 4,500 accounts. S&P didn’t disclose a figure for Basler’s legal costs, which the ratings company said would be offset by earnings.
Basler rose 0.4 percent to 79.6 francs as of 2:53 p.m. in Zurich trading, paring this year’s decline to 20 percent. The 44-company Bloomberg Europe Banks and Financial Services Index climbed 10 percent over the same period.
Wegelin, Switzerland’s oldest private bank, pleaded guilty in January, handing over $74 million.
The downgrade of Basler also comes after the bank set aside 50 million Swiss francs ($54 million) in its 2012 accounts for client indemnities related to losses at its ASE Investment AG unit, S&P said.