Swiss Bank Sees U.S. Fine as Part of Deferred Prosecution DealCarolyn Bandel
Zuercher Kantonalbank, the biggest Swiss cantonal bank, expects to pay a fine to U.S. authorities as part of a deferred prosecution agreement for its alleged role in helping Americans evade taxes.
“The bank will have to negotiate a DPA separately with the American authorities, which will also contain a fine,” Urs Ackerman, a spokesman for Zurich-based ZKB, said today in an e-mailed response to questions.
ZKB may have to pay a fine of as much as 720 million Swiss francs ($744 million) to U.S. authorities for managing money for Americans who dodged taxes, Tages-Anzeiger reported today without saying where it got the information. Swiss banks may pay the equivalent of 20 percent to 40 percent of the undeclared assets they managed for Americans, the newspaper said.
Switzerland, the biggest haven for offshore wealth, has been in talks with the U.S. for more than two years to resolve a Justice Department investigation of at least 13 financial firms that allegedly helped Americans hide money from the Internal Revenue Service. Switzerland wants to prevent another Swiss bank from being indicted after Wegelin & Co. pleaded guilty in a Manhattan federal court in January to conspiring to help conceal more than $1.2 billion from the IRS.
UBS, the biggest Swiss bank, avoided prosecution in 2009 by paying $780 million, admitting it fostered tax evasion and giving the IRS data on more than 250 accounts. That deferred prosecution agreement and the handover by UBS of a further 4,450 accounts, in the face of Swiss laws barring most disclosures of client data, set a precedent for current negotiations.
Deferred prosecution agreements for individual Swiss banks may only follow a general accord between Switzerland and the U.S., which would provide the framework for the handover of client account data.
Swiss Finance Minister Eveline Widmer-Schlumpf said on May 17 that the signing of an agreement with the U.S. was imminent, Tages-Anzeiger reported two days ago, citing comments made at a meeting of political party heads.
Credit Suisse Group AG, Switzerland’s second-biggest bank, set aside 295 million francs for U.S. tax matters in the third quarter of 2011. Julius Baer, the country’s third-biggest wealth manager, has said the cost of the investigation isn’t “reliably assessable.” HSBC Holdings Plc’s Swiss private bank said last year that fines and penalties relating to a tax-evasion probe by the U.S. “could be significant.”
ZKB, which is fully owned by the canton of Zurich, has previously said it is cooperating with U.S. authorities.
Of the 16.4 billion francs in net new money inflows in 2008, when some American clients switched from banks that were under U.S. scrutiny, a “low-single-digit” percentage was from U.S. clients, ZKB Chief Executive Officer Martin Scholl said in February 2012. ZKB exited its business with American clients in 2009, the bank has said.