The Swiss government held a special session today to discuss the US tax evasion case hanging over Swiss bank UBS as negotiations to settle the issue dragged on.
The Swiss government, currently in recess, is holding an extraordinary meeting today, a government official said, without adding details.
Switzerland and the United States failed on Friday to agree on a settlement that would spare UBS a tax trial, and talks will continue until August 12th, when a new status conference with US Judge Alan Gold is scheduled.
The case has big implications for the global offshore banking industry and is the sternest ever legal challenge to bank secrecy in Switzerland, whose private banks manage around $2 trillion of foreign wealth.
"My suspicion is that it is not good news. I'm sure there will be a resolution, but whether it will be as beneficial for UBS as the market was hoping is not looking likely," said Helvea analyst Peter Thorne.
Berne and Washington have already said they agreed in principle, and a settlement is expected to involve the disclosure of some of the names of the 52,000 US clients holding secret Swiss accounts the US authorities are seeking.
UBS shares, which have rallied in recent weeks on hopes of a deal, were down 0.3 per cent at 16.29 Swiss francs at 0845 GMT, in line with the DJ Stoxx European Banking index. Swiss media have said US-Swiss talks have stalled on legal details on how to allow the transfer of some client data to Washington while respecting strict Swiss banking secrecy laws.
"It is not a problem that has to do with UBS, but rather with the legal procedure," Finance Minister Hans-Rudolf Merz told Swiss television yesterday, without going into details.
According to Swiss newspaper
NZZ am Sonntag, the US wants guarantees that the so-called administrative assistance process, the legal framework under which bank client details can be transferred to the United States, will deliver the data, and quickly.
But Mr Merz said yesterday Switzerland was not prepared to introduce emergency measures to force the pace of the process.
Any transmission of such data from Switzerland to the US would normally involves potentially lengthy court appeals, and the US Justice Department is believed to be looking for ways to cut down on such delays.
Originally scheduled for July 13th, the case against UBS is now set for court on August 17th, but if the parties choose to delay further, the next available date would be Sept. 21.
Berne already stretched its legal system in February when it forced UBS to quickly hand over 250 client names, bypassing the clients' appeals, in order to settle criminal charges against the bank.
UBS's clients are believed to include many Americans with European roots who inherited substantial wealth; well-travelled businesspeople who have received offshore compensation via Swiss accounts; and people whose main objective in opening such accounts was to avoid taxes.
Reuters