Switzerland: The end of banking secrecy?

The Swiss have “capitulated to American pressure” and compromised their famous principle of banking secrecy, says Gerd Zitzelsberger in Germany's Süddeutsche Zeitung.

The “unthinkable” has happened, said Gerd Zitzelsberger in Germany’s Süddeutsche Zeitung. The Swiss have “capitulated to American pressure” and compromised their famous principle of banking secrecy. It was a matter of self-preservation. Switzerland’s UBS, the world’s largest bank geared toward the super-rich, was facing criminal charges in the U.S. that it had helped Americans evade taxes. To settle those charges, the bank agreed last week to pay a fine of $780 million and—ominously, for Switzerland—to hand over the names and account information of some 300 rich Americans. Washington has, in effect, “blown a hole in Swiss banking secrecy the size of a barn door.” And everyone else wants to stampede through the opening. Already, Britain and other E.U. countries have begun arguing that if Switzerland can bend its secrecy rules for the Americans, it can bend them for others.

UBS has just set a terrible precedent, said Viviane Menétrey and Fabian Muhieddine in Switzerland’s Le Matin. Bank officials rolled over in fear after Washington threatened to take away its U.S. license and levy additional hefty fines that the troubled bank could not possibly afford. But Swiss regulators should have instructed UBS to wait for a ruling from the Swiss courts—which, as it turned out, would have placed an injunction on the release of bank customers’ data. By the time the court ruled, though, UBS had already delivered the information to Washington. Switzerland would rather “give in to pressure from the U.S. instead of defending tooth and nail one of the main strengths of our financial industry.”

It gets worse, said Pierre Ruetschi in Switzerland’s La Tribune de Genève. Just after UBS agreed to release data on the 300 Americans, the IRS filed a separate suit, seeking a court order to force UBS to hand over information on 52,000 U.S. citizens who collectively hold securities and cash with UBS worth nearly $15 billion in “secret accounts.” The Swiss government can’t possible accede to this sweeping request. To do so would be to “destroy in an instant Switzerland’s reputation for confidentiality.” How ironic that the Swiss were so ecstatic at the election of Barack Obama, thinking it marked a return to U.S. values of friendship. Instead, Washington’s strong-arming of Switzerland “practically amounts to a declaration of war.”

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The government is planning its retaliation, said Switzerland’s Neuer Zürcher Zeitung. The largest party in the coalition government, the Swiss People’s Party, wants to repatriate all Swiss gold stored in U.S. vaults. It is also threatening to reconsider the longtime Swiss policy of representing the U.S. in countries such as Cuba and Iran, where there is no American diplomatic presence. But whatever happens

to U.S.-Swiss relations, the damage is done. Swiss banking will never be the same.

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