Swiss watchdog 'acted correctly'

Switzerland's financial regulator said it acted correctly during a tax evasion and credit crisis that threatened to bring UBS…

Switzerland's financial regulator said it acted correctly during a tax evasion and credit crisis that threatened to bring UBS, the country's largest bank, to its knees and affect the entire economy.

A parliamentary report said in May the Swiss government failed to act swiftly to prevent the bank's credit problems and the government had exerted pressure on the regulator to order UBS to hand over client data from around 4,450 accounts to US tax authorities.

"The former Swiss Federal Banking Commission (now FINMA), in response to its own risk assessment, advised the Federal Council clearly and in good time that in the fulfilment of its legal mandate it would ultimately be obliged to order the disclosure of the client data under the Banking Act," FINMA said today.

"FINMA was not put under pressure by the Federal Council to arrive at this decision."

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The Swiss government offered 6 billion Swiss francs (€4.5 billion) to UBS in October 2008 to prevent the bank collapsing under more than $50 billion of writedowns on toxic US assets.

Four months later regulator FINMA ordered UBS to disclose the client data to US tax officials to avert criminal charges against the bank, a first breach of Swiss bank secrecy rules that grew wider over following months.

FINMA said today it had no evidence of wrongdoing by UBS executives related to the damaging US legal case.

Unless FINMA came into possession of any previously unknown evidence showing that former chairman Marcel Ospel, ex-chief executive Peter Wuffli and former head of wealth management Raoul Weil had acted incorrectly, there were no grounds to investigate their business conduct if they again took executive positions at another Swiss financial institution.

However, they would have to provide a formal written declaration that they had no knowledge of any breaches of duty if they took up new positions. Any false declaration would lead to criminal prosecution, FINMA said.

In April, UBS shareholders took the unprecedented step of refusing to exonerate Mr Ospel and Mr Wuffli for the risky investment bets that brought the bank to the verge of collapse during the credit crisis, opening the door to potential damages claims.

Reuters