Switzerland’s second-biggest bank Credit Suisse said yesterday that it had warned American clients that they may be the target of a US tax probe, after it was ordered by Bern to provide the clients’ details.
Bern has signed deals with several countries to regulate untaxed assets hidden in Swiss banks
“In connection with the Internal Revenue Service Treaty Request, the Swiss Federal Tax Administration (SFTA) has issued an order directing Credit Suisse AG to submit responsive account information to the SFTA,” said the bank in a statement.
To warn its clients that their details may be submitted to authorities, the bank has therefore written to advise them to engage lawyers as well as contact persons in Switzerland who could represent them if required at the Swiss tax office.
The move came after Washington formally asked Bern to hand over data of Credit Suisse’s US clients, as part of its probe into whether 11 Swiss banks helped US citizens to evade taxes.
Under the procedure, the Swiss government would have to decide whether to agree to Washington’s request.
The client in question also has the right to appeal against Bern’s decision.
In its third-quarter earnings report, Credit Suisse said it had set aside 295 million francs (€242 million, $327 million) in provisions for the case.
Stocks in the bank rose after the announcement, trading up 1.55 per cent at 23.56 francs, outperforming the Swiss Market Index which was up 0.96 per cent.
Bank Vontobel analysts said that “the US tax matter and data hand over is advancing faster than expected which we believe is positive for Credit Suisse as we could potentially see a conclusion to this matter earlier than we previously expected.”
The widened US probe against Swiss banks follows a successful offensive against Switzerland’s biggest bank UBS, which was forced to pay $780 million in fine and to send details of 4,000 clients to US tax authorities.
Other banks being investigated at the moment include Julius Baer, Zuercher KantonalBank and Bank Wegelin.
Switzerland has been under pressure since the recent financial crisis over its banking secrecy rules, as countries with depleted state coffers seek to claw back revenues from tax cheats.
Bern has since signed deals with several countries, including Germany and Britain, to regularise untaxed assets hidden in Swiss banks.
Both deals come with hefty payments to tax authorities, with Swiss banks engaging to pay two billion francs (€1.64 billion, $2.24 billion) to Berlin and another 500 million francs to British tax authorities.
At the end of the G20 summit last week, French President Nicolas Sarkozy pointed the finger at 11 countries including Switzerland, saying that these tax havens would be shunned by the international community if they fail to show more cooperation on tax matters.