The break-up of Switzerland''s oldest bank Wegelin on Friday shows the need to settle a dispute with US authorities over tax cheats hiding cash in secret Swiss accounts, the finance minister said on Saturday. "It is very regrettable," Eveline Widmer-Schlumpf told journalists at the World Economic Forum of the decision by Wegelin to break itself up in the face of possible indictment on charges the bank helped wealthy Americans to evade taxes.
"This development shows how important it is that we come to solutions in the discussions, negotiations with the United States which hopefully prevent other banks getting into a similar situation," she said. The US Department of Justice is probing 11 Swiss banks, including Credit Suisse, Julius Baer and Basler Kantonalbank. "I don''t know whether other banks are in a similar or same situation...but what I know is that various banks are being threatened by the United States with prosecution and we will try to do everything...to come to a solution," Widmer-Schlumpf said.
Switzerland has been lobbying for a year to get the investigations dropped in return for the payment of a hefty fine and the transfer of names of thousands of US bank clients suspected of dodging taxes. UBS paid $780 million to settle US criminal charges in 2009 and also turned over the names of 4,500 clients. Widmer-Schlumpf, who held talks in Davos this week with US Treasury Secretary Timothy Geithner, said she hoped to reach a deal in the coming months, but declined to comment on the size of the fines under discussion for Swiss banks.
"It is up to the financial institutions to say how much they are prepared to pay. It is not up to the state," she said. Switzerland struck deals last year with Britain and Germany that would allow their citizens to pay tax on secret accounts without revealing their identities, although these are being challenged by the European Commission which wants to force Switzerland to accept an automatic exchange of bank information. Widmer-Schlumpf, who also holds the rotating Swiss presidency, said the European Unon had signalled to Switzerland it wanted to discuss a general accord with the bloc.
FRANC CAP ACCEPTED, RESPECTED Separately, Widmer-Schlumpf reiterated the determination of the Swiss National Bank to defend the 1.20 per euro cap on the franc it imposed last year even after the resignation of former bank chief Philipp Hildebrand over a currency trading scandal. "They have said they will do everything to pursue this policy so the signal is clear," she said.
"We see today that 1.20 is accepted, is respected. Whether the national bank decides sometime to move it, it will have to examine itself and whether it can be defended. That is not up to politicians, that is up to the national bank." Thomas Jordan, SNB vice chairman who took over as interim head after Hildebrand stepped down, has vowed to defend the cap and said the SNB would take further steps should the economic outlook and deflationary risks make them necessary. "Mr Jordan is doing an excellent job," Widmer-Schlumpf said, adding she hoped the SNB''s supervisory council would make a proposal as quickly as possible over who should replace Hildebrand permanently.