UBS will ‘pay a price’ in US tax case, Swiss minister says
By Kim Dixon
WASHINGTON, July 7 (Reuters) – Swiss bank UBS AG has made mistakes and will likely have to pay a price to settle the U.S. government’s tax case against it, Switzerland’s domestic economy minister said on Tuesday.
The Swiss government is trying to halt the U.S. suit and is taking its case to a top official in the Obama administration, arguing that saving the bank will help the world economy avoid another fiasco like the collapse of Lehman Brothers.
A settlement with Washington would allow UBS, the world’s biggest wealth manager, to concentrate on a badly needed restructuring after it lost billions of dollars in the global financial crisis and had to be rescued by the Swiss state.
The U.S. government is suing UBS in a civil suit, seeking to force the bank to identify an estimated 52,000 Americans suspected of using secret foreign accounts to hide nearly $15 billion in assets and avoid taxes. In February UBS paid $780 million to settle a U.S. government criminal probe and acknowledged that some of its employees had helped U.S. clients hide money and avoid U.S. taxes.
UBS has resisted the request to release client names, saying this would violate Swiss bank secrecy laws.
Doris Leuthard, head of the Swiss federal department of economic affairs, said UBS will need to “pay a price” for any deal with Washington.
“They have done mistakes. It’s obvious it will cost them something,” Leuthard said.
She was to meet later Tuesday with the head of President Barack Obama’s Council of Economic Advisers, Christina Romer.
Leuthard said the Swiss understand the importance of the United States collecting unpaid taxes, but said she will stress the global importance of UBS.
“As we have seen with Lehman brothers .. the big banks have an influence on stability,” she said.
The failure of the U.S. government to help save Lehman last year is widely seen as exacerbating the financial crisis.
The Swiss government is seeking to quickly sell its 9 percent stake in UBS. Leuthard said that sale is not contingent on a settlement with the United States.
“No, this is not a link,” she said. “It’s also for us a question of the stock. We would like also to earn some money for this investment.”
Leuthard said she hopes the bank is strong enough to not need any more government aid.
“I think for the moment UBS has stabilized. Although this will take time for them to be as strong as they were five years ago, it is up to them. They made mistakes so they have to pay the price for that.”
“It is our hope that they can recover without state aid but we can never exclude (that) because they are an important bank worldwide.”
A hearing in the U.S. tax case is set for July 13 in Florida. (Reporting by Kim Dixon; editing by John Wallace)