Credit Suisse Says No Guarantee of U.S. Tax Deal This YeaGiles Broom
Credit Suisse Group AG said it can’t guarantee resolving a dispute with the U.S. Justice Department this year as Switzerland’s second-biggest bank prepares to hand over data on former American clients suspected of tax evasion.
While “actively seeking” a resolution, “I don’t think we could make a commitment or a forecast that it necessarily will be resolved in the second half of the year,” Chief Financial Officer David Mathers told reporters on a conference call today.
Credit Suisse, one of at least 12 Swiss banks being probed by the Department of Justice for allegedly helping U.S. clients dodge taxes, is preparing to hand over information about the accounts of Americans who left the bank, Mathers said. Credit Suisse may follow larger Zurich-based rival UBS AG, which avoided prosecution in 2009 by admitting it aided tax evasion, paying $780 million and handing over thousands of client names.
Credit Suisse is free to negotiate its own settlement which would not be conditional on the Swiss and U.S. governments achieving a broader industry accord, Mathers, 48, said.
Julius Baer Group Ltd., the Zurich-based private bank established in 1890, is “more advanced” than other Swiss banks in nearing a settlement and the firm has handed over client information for the Swiss tax authority to pass on to the U.S., Chief Executive Officer Boris Collardi said on July 22. Swiss banks are trying to avoid the fate of Wegelin & Co., which was indicted by the U.S. before pleading guilty in January to helping Americans dodge taxes.
Credit Suisse has responded to some U.S. information requests by handing over documents with blacked out names to protect client identities. The U.S. Senate has yet to ratify a 2009 protocol to revise a 1996 tax accord, which would make it easier for Swiss banks to hand over client data that is normally confidential under banking secrecy laws.
“Under the terms of the existing tax treaty, we’re allowed to deliver redacted information, which meets the requirements of that tax treaty,” Mathers said. “Quite a lot of data and analysis has been delivered on a redacted basis over the course of the last 18 months.”
The Swiss Federal Court rejected an appeal to block the transfer of American client information to the U.S. government on July 5, removing an obstacle to resolving the dispute.
Credit Suisse turned over employee names and information on cross-border businesses to the U.S. after the Zurich-based bank received authorization from the Swiss government in April last year.
The bank, which began exiting its U.S. offshore business in 2008, made a provision of 295 million francs ($315 million) for a settlement in the third quarter of 2011. That provision is unchanged, Mathers said today.