DealZone

UBS’ Tax Break

August 3, 2009

UBS shares are on the rise after news of a deal in principle to end U.S. government tax litigation against the Swiss wealth management giant. This probably involves the bank handing over the names of 5,000 U.S. clients holding secret Swiss accounts, or 10 percent of the names Washington was after. The best news for investors right now is there is no fine involved.

Hardly the end of uncertainty the market would normally crave. While the deal will not formally violate Swiss bank secrecy rules, it’s hardly going to end pressure on Switzerland and UBS — and the entire offshore financial world — to stop shielding the wealthy from paying their dues.

For now, the ebbing threat of a fine, removing the risk of more capital-raising by UBS, is being welcomed. Now, all the bank needs is a business model built on better citizenship. Perhaps they can manage something dramatic before they report quarterly results tomorrow. UBS is expected to post a second-quarter net loss of 1.1 billion Swiss francs ($1 billion). It lost billions of business from wealthy clients after it handed over about 250 names in February to settle a separate U.S. criminal probe.

Comments
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Its still only 10%, that’s not a victory for Washington its more like an insult. Swiss banks have become so powerful because they’ve always been a haven for dirty money. Nazis, dictators, drug cartel bosses they all found a safe place with no questions asked. The word fence comes up in my mind.

 

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