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COLUMN – Swiss guard bank secrecy: Margaret Doyle
Margaret Doyle is a Reuters columnist. The opinions expressed are her own
By Margaret Doyle
LONDON, July 9 (Reuters) – The Americans are on a fishing trip. The fish they are after are big: 52,000 of their fattest fellow citizens, and they have invited the Swiss to land them. Understandably, the Swiss are not keen to haul in the net and hand over the source of much of their income.
The US demand that UBS <UBSN.VX> <UBS.N> disclose the names of 52,000 American citizens suspected of tax evasion has galvanised the Swiss government into threatening to bar the bank from doing anything of the sort.
The US administration would be ill-advised to pick a fight here, and there is plenty of room for a compromise. The Swiss have already agreed in principle that if the US can present evidence of suspected tax evasion, then they will be prepared to disclose account details. Their aim is to protect clients’ legitimate privacy (often against governments with more malign intent than President Obama’s) against wide-ranging fishing expeditions, while not harbouring fraudsters.
Meanwhile America, which has already forced the Swiss to be more open, smoothes the feathers of the ally that has represented the country’s interests in Teheran for three decades.
If a deal cannot be struck, it could be expensive for both UBS and the Swiss government, a minority shareholder after a massive bail-out. The judge in this Miami case has asked America’s Department of Justice to clarify if it would seek to seize UBS’s American operations if it fails to comply with a court order.
That would mark an expensive exit from a market after so much hard work. UBS spent $12 billion on Paine Webber to establish its US wealth management business, but even in the go-go years it was no great success, accounting for a quarter of UBS employees but just 5 percent of profits.
The bank denies that the business is for sale. If its government paymasters fail to come to a deal with Washington, it may find that the question is academic. Crying stinking fish would not help.