Swiss bank Valiant first to bow to US tax probe
December 11, 2013, 12:30 am TWN
ZURICH--Valiant Holding AG has become the first Swiss bank to say it would work with U.S. officials in a crackdown on wealthy Americans evading taxes through hidden offshore accounts.
The Swiss regional bank said it would participate in the scheme brokered by the two countries' governments because it could not say definitively that all its U.S. clients paid their taxes.
“The costs of the U.S. program will not jeopardize the financial stability of Valiant in any way. This decision does not endanger the distribution of an unchanged dividend,” Valiant said in a statement published late on Monday.
A host of banks are expected to tell Swiss financial regulator FINMA this week that they will bow to U.S. pressure to come clean on any past transgressions and face up to fines.
Valiant said an internal review showed it had never actively sought U.S. clients or visited Americans to drum up business. The bank said less than 0.1 percent of its clients were American.
By contrast, Zurich-based bank Vontobel Holding said it would participate in the U.S. program, but declare itself free of hidden U.S. client funds. The bank began transferring business with wealthy Americans into an entity registered with the Securities and Exchange Commission in 2008, when the crackdown intensified.
With roughly 17 billion Swiss francs (US$19 billion) in assets, Valiant is dwarfed by larger Swiss private banks such as UBS, which manages 2.2 trillion francs.
The fines can be as much as 50 percent of assets managed on behalf of American clients, depending on how egregiously the banks acted in their dealings with those customers. Fines would have to be disclosed to investors because they could have an impact on share prices.
Others being scrutinized are listed private banks such as EFG International, St. Galler Kantonalbank, which owns private bank Hyposwiss, Linth Bank and Banque Cantonale Vaudoise.
These banks are likely to offer the first indication of how many firms the U.S. authorities can bring to cooperate because, as publicly listed stocks, they are subject to disclosure rules. Switzerland has hundreds of unlisted banks.
If the banks shun the U.S. offer, individual firms and their senior staff risk criminal prosecution.
A failure to cooperate could also hold up a settlement for around a dozen of Switzerland's largest banks, including Credit Suisse, Julius Baer, Pictet, and local government-backed Zuercher Kantonalbank (ZKB), which are under formal investigation by the U.S. Department of Justice.
In 2009, UBS, Switzerland's largest bank, was fined US$780 million and agreed to hand over the names of U.S. clients with secret Swiss bank accounts to avoid facing criminal charges.