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Saturday, October 31, 2009

Swiss banks lose European clients

Source: WSJ
While the spotlight has been on the aggressive drive by the US Government to flush tax dodgers out of Switzerland, bankers here are instead grappling with the loss of a much richer clientele: Europeans.

Americans have made up no more than 5% of Switzerland's $1.8 trillion (€1.2 trillion) offshore-banking business. But European clients are steadily coming clean, spooked by threats of a crackdown by their own governments.

Nonresident, or offshore, clients make up about a third of Switzerland's private-banking business, with just more than half of those coming from other European countries. According to KPMG, as much as 80% of the Europeans' money in Switzerland is undeclared. In all, KPMG reckons that tax evasion could represent up to 25% of Switzerland's total private-banking market.

This weekend, Swiss banking giant UBS will hand over the names of 500 suspected American tax dodgers to the Internal Revenue Service, the first of 4,450 names it will turn over as part of an August agreement between the US and Swiss governments. That accord marked a historic breach of Switzerland's cherished bank secrecy, and prodded many Swiss banks to refuse to take American clients for fear of falling foul of US laws.


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