Financial Regulatory Forum

Gruebel: UBS cannot comply with U.S. request-source

July 10, 2009

   By Ajay Kamalakaran
   BANGALORE, July 10 (Reuters) – UBS cannot comply with a U.S. request to disclose the identity of 52,000 U.S. secret account holders, the bank’s chief executive Oswald Gruebel said in an internal memorandum, according to a source familiar with the situation.
   The UBS <UBSN.VX><UBS.N> chief executive officer sent the confidential memorandum to the bank’s top executives on Thursday, the source said, confirming comments reported earlier in the day by the New York Times.
   Gruebel, hired in February to turn around the troubled Swiss wealth manager, said turning over the names “would require UBS to violate Swiss criminal law, and we simply cannot comply,” the paper quoted Gruebel as saying in the memo.
   A court hearing seeking to assess whether UBS is to disclose the names to U.S. tax authorities is due to start on Monday.
   The judge presiding the hearing has ordered the U.S. government to say by 1600 GMT on Sunday whether it was prepared to shut UBS in the United States as part of a battle to learn the identity of the accounts suspected of being used by Americans to avoid taxes. [ID:nL8497355] 
   Switzerland, the world’s biggest offshore banking center, vowed in filings to the U.S. court to prevent UBS from handing over client data to the Internal Revenue Service (IRS) to defend bank secrecy laws, saying the tax case is souring diplomatic ties.
   UBS said in an emailed statement: “The IRS summons puts UBS in an untenable position, caught between the laws of two sovereign nations.”
   “Honoring the IRS summons would require UBS to violate Swiss criminal law.”
   A UBS spokesman in Hong Kong declined to comment on the memo.
   Even though tension between the two nations has been raised, Swiss National Bank Chairman Roth said he had no doubt that the lawsuit against the country’s former flagship bank UBS in the United States would be resolved.
   “We have no doubt that this bilaterl fight will be resolved,” Roth told the German daily Handelsblatt according to a version of the interview on the paper’s website.
   “This fight is obviously an important issue for UBS. But the bank has also taken measures to reduce risks. UBS today is a strongly capitalised bank today.” (Additional reporting by Lisa Jucca in Zurich) ((ajay.kamalakaran@reuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800 +1 646 897 1898; Reuters Messaging: ajay.kamalakaran.reuters.com@reuters.net))
 Keywords: UBS/ 
   
Friday, 10 July 2009 07:19:06RTRS [nLA315492 ] {C}ENDS

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •