Swiss parliament approves UBS-US tax deal
Geneva, June 17, 2010
Switzerland's parliament backed a Swiss-US tax treaty crucial to the future of UBS AG, ending months of uncertainty over the deal and paving the way for renewed recovery at the Swiss bank.
The two houses of parliament agreed not to stage a referendum on the issue after crisis talks on Thursday, meaning Swiss tax authorities should be able hand over on time to US
counterparts the accounts of 4,450 UBS clients that Switzerland's biggest bank helped to dodge taxes.
Berne and Washington cut the deal last August to end a damaging tax case against UBS, but its wealthy clients continued to leave in droves as the threat of further legal action loomed if Switzerland failed to deliver on its promises within a year.
"UBS is finally off the hook and will regain ground in its wealth management business," said Sarasin analyst Rainer Skierka.
Thursday's vote will bolster UBS chief executive Oswald Gruebel's attempts to steer the world's second-biggest wealth manager to safety after a government bailout in the crisis.
Client cash could stop gushing from UBS by the end of 2010, turnaround specialist Gruebel assured investors last month, as the bank booked its biggest quarterly profit since he took charge.
The timetable for a referendum would have prevented the handover of the client accounts on time, breaking the terms of the tax treaty and risking US retaliation that would have shaken clients' confidence further.
"Parliamentary approval means that nothing now stands in the way of UBS client details being disclosed," the Swiss Justice Ministry said.
UBS welcomed Swiss parliamentarians' decision to back the deal. "UBS continues to focus on its comprehensive and timely compliance with all obligations ... and is confident that this will be achieved by the relevant deadlines in August 2010," it said in a statement on Thursday.
UBS has handed over the data to Swiss tax authorities for processing, as required by the United States, but a legal loophole prevented the Swiss passing on the data.
A Swiss court in January blocked the data transfer, forcing the government to bypass that ruling with a legal patch that required parliamentary approval by both houses.
Switzerland's largest party, the right-wing Swiss People's Party (SVP), shifted position at the 11th hour, allowing the lower house to back the deal without the referendum it had urged. - Reuters