GENEVA: Switzerland has no choice but to bow to a US ultimatum and sidestep its banking secrecy laws to end an investigation into how Swiss banks helped wealthy Americans to evade taxes, former Deutsche Bank head Josef Ackermann said.
The Swiss parliament is divided over a government bill that would let Swiss banks hand over internal information to the US authorities in the hope of avoiding threatened criminal charges - though the banks still face fines likely to total billions of dollars.
Ackermann, who is chairman of Zurich Insurance, said that Switzerland should accept the offer, though he described it as an "unconditional diktat" that was not an example of "respectful diplomacy" towards a long-standing partner.
"A sober assessment must conclude ... that there is indeed no alternative to accepting the US offer," he said at an event sponsored by Thomson Reuters in Geneva on Monday to mark the start of the Reuters Global Wealth Management Summit.
"It probably provides the last opportunity for solving a highly contested issue in a manner that conforms with Swiss law ... and our understanding of bank client privacy."
Ackermann said he expected most members of parliament - many of whom were initially opposed to the government's plans - would eventually understand the urgency of supporting the legislation, which faces its first formal hearing in Bern on Monday.
Though he acknowledged that the fines would not be pleasant, he said that they would not destroy the Swiss financial system or individual institutions.
The Swiss government is asking parliament to rush through the legislation in June, citing a US threat of further criminal charges against more banks. Since returning to Switzerland from Germany last year, Ackermann has become a forceful advocate for the Swiss financial sector and is a rare senior banker still in a position of power given the departure of other top figures since the financial crisis.
Switzerland's tradition of banking secrecy has helped to make it the world's biggest offshore financial centre, with $2 trillion in assets. But its position has come under fire since the crisis, as cash-strapped governments clamp down on tax evasion, with authorities in Germany and France also investigating Swiss banks.
Ackermann, who worked at Credit Suisse earlier in his career, said that Swiss bankers had long operated on the principle that it was legitimate to help foreigners seeking to protect their wealth from high taxes.
"We have to understand that this is no longer acceptable," he said. "We will have more and more pressure from other parts of the world."
US THREAT
UBS, Switzerland's biggest bank, was forced in 2009 to pay a fine of $780 million and deliver the names of more than 4,000 clients to avoid indictment, helping the US authorities to pursue other Swiss banks.
Juerg Zeltner, head of the UBS private bank, said he hoped parliament would approve the US legislation for the sake of the industry, even though UBS has long settled its tax dispute.
"We need a solution," he told the Reuters summit. "This is very important for Switzerland and the financial centre."
Banks under formal US investigation include Credit Suisse , Julius Baer, British bank HSBC's Swiss arm, privately held Pictet in Geneva and smaller players such as LLB's Swiss arm and local government-backed Zuercher Kantonalbank and Basler Kantonalbank.
Ackermann also urged Switzerland to step up debate with the Organisation for Economic Cooperation and Development ( OECD) to push for an internationally binding standard on the automatic exchange of client information.
indiatimes.com
The Swiss parliament is divided over a government bill that would let Swiss banks hand over internal information to the US authorities in the hope of avoiding threatened criminal charges - though the banks still face fines likely to total billions of dollars.
Ackermann, who is chairman of Zurich Insurance, said that Switzerland should accept the offer, though he described it as an "unconditional diktat" that was not an example of "respectful diplomacy" towards a long-standing partner.
"A sober assessment must conclude ... that there is indeed no alternative to accepting the US offer," he said at an event sponsored by Thomson Reuters in Geneva on Monday to mark the start of the Reuters Global Wealth Management Summit.
"It probably provides the last opportunity for solving a highly contested issue in a manner that conforms with Swiss law ... and our understanding of bank client privacy."
Ackermann said he expected most members of parliament - many of whom were initially opposed to the government's plans - would eventually understand the urgency of supporting the legislation, which faces its first formal hearing in Bern on Monday.
Though he acknowledged that the fines would not be pleasant, he said that they would not destroy the Swiss financial system or individual institutions.
The Swiss government is asking parliament to rush through the legislation in June, citing a US threat of further criminal charges against more banks. Since returning to Switzerland from Germany last year, Ackermann has become a forceful advocate for the Swiss financial sector and is a rare senior banker still in a position of power given the departure of other top figures since the financial crisis.
Switzerland's tradition of banking secrecy has helped to make it the world's biggest offshore financial centre, with $2 trillion in assets. But its position has come under fire since the crisis, as cash-strapped governments clamp down on tax evasion, with authorities in Germany and France also investigating Swiss banks.
Ackermann, who worked at Credit Suisse earlier in his career, said that Swiss bankers had long operated on the principle that it was legitimate to help foreigners seeking to protect their wealth from high taxes.
"We have to understand that this is no longer acceptable," he said. "We will have more and more pressure from other parts of the world."
US THREAT
UBS, Switzerland's biggest bank, was forced in 2009 to pay a fine of $780 million and deliver the names of more than 4,000 clients to avoid indictment, helping the US authorities to pursue other Swiss banks.
Juerg Zeltner, head of the UBS private bank, said he hoped parliament would approve the US legislation for the sake of the industry, even though UBS has long settled its tax dispute.
"We need a solution," he told the Reuters summit. "This is very important for Switzerland and the financial centre."
Banks under formal US investigation include Credit Suisse , Julius Baer, British bank HSBC's Swiss arm, privately held Pictet in Geneva and smaller players such as LLB's Swiss arm and local government-backed Zuercher Kantonalbank and Basler Kantonalbank.
Ackermann also urged Switzerland to step up debate with the Organisation for Economic Cooperation and Development ( OECD) to push for an internationally binding standard on the automatic exchange of client information.
indiatimes.com
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