Friday, December 6, 2013

Swiss Banks Scrambling to Commit to Participation in U.S.Swiss Bank Initiative (12/6/13)

Katharina Bart, Oliver Hirt and Patrick Temple-West, Swiss banks prepare to bow to U.S. demands, grudgingly (Reuters 12/5/13), here.  The key opening excerpt:
Switzerland's private banks have until Monday to decide whether to bow to U.S. pressure and ditch the centuries-old culture of secrecy that has made the Alpine state a global vault for the world's rich. 
Many are leaving it to the last minute to tell the Swiss financial regulator whether they will participate in a U.S. program to settle tax evasion suspicions that could trigger large fines and force them to identify U.S. customers suspected of using their Swiss accounts to dodge taxes.
Listed banks which participate in the program could start telling investors from next week whether or not they have to take provisions against possible fines. 
If they do not settle, individual banks and their senior staff risk criminal prosecution and, if a large number refuse to cooperate, it could hold up a future settlement for around a dozen of Switzerland's largest banks, including Credit Suisse, Julius Baer, Pictet, and local government-backed Zuercher Kantonalbank (ZKB). 
Most of the 300 or so smaller banks are expected to participate but they are anxious to find out what others are doing and wrestling with the risk of giving up client confidentiality, which could put off customers. 
"Probably a few dozen will risk being pursued by the U.S. later and stay out of the current program altogether," said a lawyer involved in bank talks.


  1. Interesting article, for the following points:

    1. "[I]f a large number refuse to cooperate, it could hold up a future settlement for around a dozen of Switzerland's largest banks, including Credit Suisse, Julius Baer, Pictet, and local government-backed Zuercher Kantonalbank (ZKB)."

    The authors are suggesting that the US might extract a greater punishment on the 14 large banks, if the masses don't join this voluntary program. Really? Would the US really punish one bank because another unrelated one will not settle? Moreover, will one bank sign up for the program simply to lessen the downside exposure of another bank?

    2. "Most of the 300 or so smaller banks are expected to participate..."

    What does this mean? A small bank with a manageable fine? A small bank with no fine? How many banks do the authors consider "small"? Where are they getting their numbers? Who is the source of this 'expectation'?

    3. "...[T]hey are...wrestling with the risk of giving up client confidentiality, which could put off customers."

    The Swiss banks would gladly throw their US customers under the bus to save themselves money. The only issue for the Swiss banks will be that the fines are so high that, in comparison with the risk of criminal charges being filed, there will be a big disincentive to participate -- except perhaps for egregious cases with manageable fines.

    The Swiss government recently publicly encouraged its banks to participate. This was a term of the US - Swiss deal.

    It will be interesting to see how this unfolds.

  2. I left unemployment in the US and found work in Switzerland in 2001. Does this mean that the US is going to force banks to harass me simply because filed US tax returns on declared taxed income until I was forced to renounce US citizenship due to national origin discrimination caused by US policy? National origin discrimination is a US federal crime and America does not assist Americans living outside of US jurisdiction who are wrongly harmed by US policy.

    In my view, America should apologize to Americans living in Switzerland instead of causing unnecessary trouble outside of US jurisdiction. I mean, heck, Switzerland approved FATCA, so why is the US still obsessed with its desire of harming the middle class further? Has America not already caused enough crime against the innocent?

  3. Valentin Landmann published a book which has been released to the press today. The books talks about America's economic war and blackmail, and the contents is totally justified. It has become a great Swiss honor to hate the criminal American government. These days, Americans are highly talented in seeking to becoming hated. Here is the press release about the book:

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  5. The US is now wrongly forcing innocent banks to accuse themselves of being "guilty":

  6. Thanks JustMe for your analysis. One thing the banks should keep in mind is that with OVDI the US treats everyone regardless of individual facts as the worst of the worse and punishes them accordingly. An accidental American who has spent his life outside the US is subject to the same 27.5% as someone who intentionally used entities, had cash delivered or picked up in the US, or perhaps had diamonds smuggled in a toothpaste tube.

    Likewise they should expect that if they opened even one salary-account for a Swiss who happened to have a green card, they will be treated the same as UBS.

    Many of the smaller and cantonal banks are similar to US Savings & Loans in terms of clientele and activity with US markets. They should strongly consider giving up their USD correspondent accounts, no longer dealing in US shares and just dealing in CHF and EUR and staying away from this "deal."

    I don't know whether other banks were as egregious as UBS but I see no legal basis for punishing a bank which does not actively market secrecy as a vehicle for breaking laws but merely does business with foreigners, sometimes unknowingly.

  7. Thanks for sharing the article from 24 Heures. The article speaks of reluctance amongst many banks, though they are keeping mum as to what they will decide to do. The article mentions that there are 14 banks negotiating individually including Pictet, Baer, ZKB, BKB, and CS. Only Corner Bank of Ticino has stated that they intend to join.

  8. I know some German, not enough to understand the article completely, but now the big 4 accounting firms find it too risky to evaluate whether banks would fall into Category 2 or 3 and want no part in that business.

    If using Google translate (not too useful) note that a "busse" is a fine not a bus as it is incorrectly translated.

  9. The US deadline (the one which really counts) is Dec. 31. The Dec. 9 deadline is a FINMA deadline. Raiffeisen has been mentioned as one bank which has not met the deadline to inform FINMA. Raiffeisen will presumably decide at its Dec. 13 meeting.

    Raiffeisen isn't really one bank but an umbrella group of individual banks under that name. They are historically and primarily a working person's bank so one would not expect them to have much activity with foreigners except local residents, who would be attracted by the bank's low fees.

    Postbank, the post office bank which until recently wasn't technically a bank has declared itself as being in Category 2. I find this surprising since its bread and butter is small local passbook accounts.

  10. Just read this this morning, to add to the conversation and understanding of what is happening to the Swiss OVDP. (you don't get it from Reuters or bloomberg, imho.)

    I am afraid, that a lot of minnow banks, will be scared into the OVDP (like the US version for U.S. persons) and essentially "plea bargain" a guilty payment for peace of mind, they think.

    This ...

    US tax deal could prove deadly for small banks

    and this

    Swiss banks hit deadline to reveal hidden accounts to US

  11. What is interesting is that for a bank to be Category 3 its deposits must be 98% EUROPEAN. Not non-US, but european. So a bank with a substantial clientele from Arab countries, ex-USSR, China or Latin America would be disqualified. This raises the question as to whether the US is really only after banks serving US clients, or banks which compete with US banks for third-country deposits (again, Arab, Lat. Am. etc.)

  12. Migros, Coop, Valiant, Vontobel and Berner Kantonalbank are among those who have joined the US program. Migros said that it believes that 370 of its 825,000 clients may meet the criteria.

  13. I meant Category 4 not Category 3.

  14. I think what they're getting at is that a bank serving "local" clients seems more innocent. If that's the case, you have to draw the line somewhat as to what is local and what is not.

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