Swiss prepare to turn the page on UBS US tax saga

25th August 2010, Comments 0 comments

Swiss banking giant UBS launched a global advertising campaign this week to spruce up its image as Switzerland seeks to close one of its most damaging tax evasion spats under a deal with the United States.

After being forced to water down its sacrosanct banking secrecy to help pull UBS out of trouble in the United States, the Swiss government was due to complete the disclosure of details on more than 4,000 American account holders in Switzerland to US authorities by an August 26 deadline.

The US Internal Revenue Service warned in June it was ready to renew legal action if Switzerland failed to meet the terms of the August 2009 deal obliging UBS to provide the names of customers allegedly dodging American taxes.

While Bern was expected to complete a clean-up of its international image and turn the page, analysts and politicians said UBS, once the country's biggest bank, would still face a rocky ride.

UBS "remains the bank that was caught with its hand in the jam pot," said Roby Tschopp of the shareholders lobby group Actares.

Some 4,200 of the 4,450 names would have been handed over by Thursday, with 200 spared because there as no evidence of fraud, according to the daily 24 Heures.

Le Temps reported that 2,500 case files including account statements and bank e-mail correspondence were sent to Washington at the end of July.

A Swiss finance ministry spokesman confirmed the information in Le Temps but declined to give further details.

US tax authorities started their offensive against UBS in 2008 after questioning a former banker, prosecuting the bank through US courts and forcing it to hand over 300 client names and pay a 780 million dollar fine.

The IRS subsequently threatened the Swiss bank, which by then was struggling to survive the global financial crisis, with more litigation over another 52,000 suspected tax evaders.

The lawsuit was averted after the Swiss government intervened to negotiate a settlement with Washington, fearing permanent damage to Switzerland's then biggest bank that could have undermined its whole banking system.

The UBS case also sharpened broader international pressure on the country's tradition of banking secrecy, forcing Swiss authorities to narrow its scope in March.

Meanwhile, UBS's solid reputation in Switzerland was tarnished by the speculative trading that helped spark its decline and its need of a multi-billion dollar government rescue package in October 2008, prompting account holders to switch to other banks.

The US litigation added to the unease.

Socialist parliamentarian Roger Nordmann told AFP the bank still suffered from "general credibility problems."

The US authorities "showed to what extent it had acted like a criminal organisation with an organised strategy to help (tax) fraudsters," he added.

"There were years when UBS invested 200 million Swiss francs in a campaign to do with its image, we are well over that sum," UBS spokesman Jean Raphael Fontannaz told Swiss television TSR about its global advertising campaign.

Rainer Skierka, an analyst at Bank Sarasin, said the bank had moved back into profit for three quarters and was working hard under new management to recover thousands of lost customers.

UBS is "working in the right direction but it will take time," he added.

© 2010 AFP

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