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Business

UBS will hand over 4,450 account names in tax-case settlement

Video by Rebecca BOWRING , Claire PRYDE

Text by NEWS WIRES

Latest update : 2009-08-20

The Swiss government said Wednesday that UBS, Europe's largest bank, will hand over details of 4,450 accounts to US authorities according to the settlement of the US tax-fraud case.

AFP - Troubled UBS is set to disclose details of 4,450 accounts to US authorities as part of a settlement of potentially damaging tax fraud charges against the Swiss bank, US and Swiss governments said Wednesday.
   
In lawsuit earlier this year, US authorities had accused the Swiss bank of "systematically and deliberately" violating American laws by promoting offshore accounts for American citizens, demanding it reveal the names of 52,000 US clients.
   
Switzerland and the United States, however, concluded an agreement to end the litigation in a US court, and sharply reduced the scale of the tax fraud charges that had threatened to deliver a severe blow to Swiss banking secrecy.
   
UBS said it had also reached a parallel out-of-court settlement with US tax authorities that averted a financial penalty for the bank.
   
"The agreement between Switzerland and the United States has entered into force," the Swiss government said in a statement after a meeting here.
   
In return for a decision by US authorities to drop their lawsuit against UBS, Switzerland agreed "to process within one year with a new request for administrative assistance relating to some 4,450 accounts," it added.
   
The agreement also "states that the United States will refrain from unilateral information-gathering measures that infringe Switzerland's sovereignty and rule of law," according to the Swiss government.
   
UBS said in a statement that it had also signed a parallel out of court settlement with US tax authorities that "does not call for any payment" by the bank.
   
"It resolves all issues relating to the alleged breaches" set out in the case by the Inland Revenue Service, the bank added.
   
Attorneys announced on August 12 that the two sides had initialed a deal   but the details were only revealed on Wednesday.
   
The litigation over 52,000 names in the United States, which followed a 780 million dollar (587 million euros) fine in a similar tax-related case in February, has weighed on the bank's recovery from severe losses in the global financial crisis.
   
It had also threatened to deliver a severe blow to Switzerland's highly prized but also internationally-criticised banking secrecy.
   
UBS reported a net loss of 1.4 billion Swiss francs during the second quarter of 2009 and warned that it needed more time to return to profitability.
   
The Zurich-based bank, one of the biggest losers in the global financial crisis, has also been struggling to keep customers on board. They withdrew assets amounting to 39.5 billion Swiss francs in the second quarter alone.
   
UBS said it would also write to "affected US persons," encouraging them to voluntarily disclose their accounts to US tax authorities.
   
 

Date created : 2009-08-19

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