Switzerland's banks have issued an unusually direct apology for their role in helping tax cheats, following a landmark settlement with the United States which could threaten the existence of some firms.This content was published on September 3, 2013 - 15:22
The banks do not yet know the ultimate cost of the government settlement; they have until the end of this year to come forward in reporting tax evasion by their American customers.
The deal struck with US investigators – which will allow some banks to pay fines to avert prosecution – follows a long-running US drive to pierce the veil of Swiss banking secrecy.
"It was not because we lacked skills and knowledge that we found ourselves in these unfortunate situations. It was because we acted wrongly and we displayed wrong conduct," stated Swiss Bankers Association Chairman Patrick Odier at a news conference on Tuesday.
"I regret this all the more because we have damaged the reputation of the entire Swiss financial centre."
The wording used in the apology is the strongest yet from a representative of Swiss private banking, which has been buffeted by massive pressure on banking secrecy and various investigations of its banks by US and European officials.
Odier said Swiss regulators had assured him that the Swiss banking industry can shoulder the fines attached to the US settlement. Nevertheless, the deal may jeopardize the existence of Swiss banks that focused on attracting wealthy Americans and helping them hide their funds in offshore accounts to escape detection by tax officials.
"There may be a few exceptions: banks which concentrated too much on these business activities may run into difficulties."
The lobby has consistently advocated settling the issue by making amends. But many banks were taken aback at fines which, in proportion to their size, could dwarf the $780 million (over CHF920 million at the time) paid by UBS in 2009 to settle a similar investigation.
Switzerland's oldest bank, Wegelin & Co, shut its doors permanently after more than 250 years in the business following its guilty plea to conspiracy over tax evasion. The bank was later sentenced to pay $58 million.
The US deal will apply to about 100 second-tier Swiss banks. They could have to disclose some previously hidden information and face penalties of up to 50 per cent of assets they managed on behalf of wealthy Americans.
But the settlement does not cover banks already under US criminal investigation, including some of Switzerland's biggest banks, such as Credit Suisse and Julius Baer.