UBS and the US government have agreed to an out of court settlement ending one of the most bitter assaults on Switzerland’s hallowed bank secrecy laws. The case has significant implications for the future of client confidentiality, amid fears among many Swiss bankers that a dilution of traditional secrecy rules could prompt a defection by worried foreign customers. No details of the deal were revealed yesterday, pending formal signing, probably early next week. However, lawyers said the settlement would involve UBS supplying the names of least 5,000 US offshore clients and possibly paying a big fine. Shares in the bank closed up 3% at SFr16.34 on relief that the issue had finally been resolved. Bankers were reluctant to comment before knowing the terms. But the Swiss bankers’ association said it expected the settlement “would be consistent with Swiss law”. The difficulty of finding a formula allowing Bern to authorize a breach of secrecy rules, while maintaining the facade of confidentiality, probably explains why the deal took so long, after lawyers indicated agreement in principle last month. Lawyers said a crucial factor might have been the willingness of the Internal Revenue Service to act in line with formal international legal assistance procedures, rather than demanding exceptional accelerated treatment.
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