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WORLD> America
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Delay in US tax trial boosts UBS shares
(China Daily)
Updated: 2009-07-14 09:41 ZURICH: Shares in UBS rose and were outperforming bank peers yesterday after the Swiss bank and the US government sought to delay a major US tax trial in a move pointing to a possible negotiated settlement. The case, seen as key to the future of the global offshore banking industry, seeks to force UBS to reveal the identities of 52,000 rich Americans suspected of using secret Swiss bank accounts to dodge taxes. The US Department of Justice and UBS asked a federal judge on Sunday to delay until August 3 the trial "to continue their discussions" seeking a resolution of this matter.
UBS shares were up 1.7 percent at 0809 GMT at 12.84 Swiss francs compared with a 0.6 percent weaker DJ Stoxx European banking index. In a statement on Sunday, UBS welcomed the fact that the US and Swiss governments had agreed to negotiate an end the tax litigation. A spokesman declined further comment yesterday. "The ultimate settlement of this case should remove a key regulatory overhang on UBS stock and serve as a near-term positive even if the 'green shoots' of operational recovery may take longer," said Kinner Lakhani, an analyst with Royal Bank of Scotland. The Department of Justice, which cautioned on Sunday it was still ready to ratchet up its legal fight with UBS, said any settlement would necessarily include the bank providing information on a significant number of its US clients, even though this is against Swiss law and would put UBS at risk of criminal charges. A person familiar with the situation told Reuters last week that, to circumvent Swiss law, the Swiss government could agree to disclose UBS bank client data indirectly, possibly by helping the US Internal Revenue Service cross-check US banks' data about transfers from Switzerland and UBS. UBS Chairman Kaspar Villiger said last week the focus of the discussions was the client data, not a possible fine and said that speculation of UBS having to pay billions of dollars in the tax dispute were completely unfounded. Earlier this year, the bank agreed to pay $780 million and to disclose around 250 US client names when it settled a separate, but linked criminal case in the United States. US tax officials have accused UBS of hiding $20 billion of US taxpayers' money in undeclared offshore accounts. UBS, which employs 27,000 people in the United States and manages more than $600 billion at its Wealth Management Americas division, is struggling to recover from the subprime crisis. The bank has written down more than $50 billion in the subprime crisis and had to accept government help last year. It is due to report second-quarter results on August 4. Reuters |
