UBS existence threatened in US tax case

19th February 2009, Comments 0 comments

Swiss regulator FINMA criticises UBS for violating legal and banking regulations.

GENEVA - The tax fraud charges against UBS in the United States could threaten the existence of Switzerland's biggest bank, the Swiss financial markets watchdog revealed in a warning published Thursday.

The official regulator, FINMA, said in a statement that the USD 789 million (CHF 930 million, EUR 627 million) settlement the bank agreed with US justice authorities on Wednesday avoided criminal charges that could limit the troubled bank's liquidity.

"Such charges could have had drastic consequences for UBS and its liquidity situation and ultimately put its existence at risk," FINMA said in a statement.

Switzerland's flagship bank posted an annual loss of USD 17 billion in 2008, the largest in Swiss corporate history, and received a USD 60 billion state aid package after it was hurt by the financial and credit crises.

The regulator said it "ordered UBS to surrender a limited quantity of client data and handed it over to US authorities".

FINMA also criticised UBS after its investigation concluded that the bank not only violated US law but also "severely breached" Swiss banking regulations.

"Specifically, the manner in which it captured, limited and supervised the legal risks associated with the cross-border business with US private clients was ultimately deficient," the regulator said.

The investigation concluded that staff at the bank accepted statements from clients "which they knew or should have known" were not accurate and ignored some US supervisory rules "for an extended period of time".

The bank admitted that it was involved in a "fraudulent sham".

"UBS sincerely regrets the compliance failures in its US cross-border business that have been identified by the various government investigations in Switzerland and the US, well as our own internal review," chairman Peter Kurer said in a statement.

"We accept full responsibility for these improper activities", he added.

[AFP / Expatica]

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