Swiss Finance Minister Hans-Rudolf Merz (below) has launched a special task force in defense of Swiss banking secrecy as a counter to mounting international pressure. Merz will enlist the help of bankers, diplomats, economists and legal experts to help defend against the latest attacks.
Leading opponents of Swiss bank secrecy, including the big spending leaders of major high tax and welfare states, are moving in for what they see as possible final kill of hated Swiss banking secrecy.
Leaders such as the U.K.'s Gordon Brown, France's Nicolas Sarkosy, and Germany's Angela Merkle, see the Swiss as wounded by the continuing UBS tax evasion charges. They hope that Switzerland's controversial handing over of limited confidential client data to the U.S. Justice Dept. tax evasion probe is a possibly fatal weakness.
The Usual Suspects
Merz will travel to London next month to speak to international finance ministers before the G-20 summit begins. Switzerland's requests to attend the April summit have been rejected, an intentional snub.
Banking secrecy has long been a fundamental pillar of the Swiss financial success and has helped its banks to gain control of nearly a third of the world's private banking business estimated at over US$4 trillion.
Swiss Bankers Worried
Swiss private bankers are reportedly worried that the renewed pressure on secrecy could frighten clients off. The Tribune de Geneve newspaper cited unnamed sources that feared nine out of 10 customers would move their money elsewhere if banking secrecy was lifted.
Ivan Pictet, president of the Geneva Financial Center, told Le Temps newspaper that the banking sector's contribution to Swiss GDP would shrink from 12% to 6-7% if that were to happen.
Understandably, clients at UBS have been withdrawing vast amounts of money in the wake of the U.S. tax evasion probe. Net outflows in the UBS's wealth management and private banking businesses totaled more than US$50 billion in the last three months of 2008.
Rank Hypocrisy
The Swiss Bankers Association (SBA) said the political initiative was welcome. But some bankers have shown a strong reluctance to engage in diplomacy with countries that are attacking Switzerland's banking secrecy.
Konrad Hummler, (left) president of the Swiss Private Bankers Association, accused some countries of hypocrisy. In a statement Hummler highlighted the many offshore tax havens under British control and legal entities in the U.S. states such as of Delaware that specialize in setting up what he called "opaque shell companies to help the wealthy avoid tax bills."
The battle for what remains of offshore financial privacy continues, with Switzerland, as usual, in the lead. Perhaps Bern will be forced to ask the Vatican's Swiss Guard to come home for defensive maneuvers.
If forced to bet on it, I’ll lay my money on the continuation of Swiss banking secrecy, whether the rest of the world likes it or not.
** For an understanding of the many advantages offered by Switzerland and its bank secrecy law, you can find it in my book, Swiss Money Secrets.
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