Swiss banks deny helping tax dodgers
Zurich - The head of Credit Suisse denied on Monday that Swiss banks have been undermining a tax pact with Germany by helping wealthy clients move funds to rival financial centres such as Singapore to avoid becoming subject to taxes.
German media have accused Swiss banks of telling German clients to shift money to Singapore, Asia's prominent finance centre, to avoid detection and taxation of their assets.
The allegations have made it more difficult for Germany and Switzerland to finalise a proposed deal that would leave German account holders anonymous but under which the Swiss government would impose a retroactive withholding tax and would tax future interest income on the accounts.
A strategy of aiding tax dodgers is "economically stupid and morally unacceptable", Credit Suisse Chairperson Urs Rohner told a conference.
"Some of the noise ... is clearly unfounded as far as I can check. For example, the accusation that a lot of clients funnelled funds to other offshore centres like Singapore. Recent statistics on money flows will show you it's actually the other way around with regards to German money," he said.
The Swiss government has agreed on deals with Britain, Austria and Germany, is pursuing similar pacts with Greece and Italy, and has several more countries "banging on its doors" to negotiate treaties, Swiss banking lobby chairperson Patrick Odier told the same business audience on Monday.
But the agreement with Germany may be nearing collapse after Germany's opposition Social Democrats made tax evasion an election issue.
German authorities in July raided the homes of clients of Credit Suisse. Last year the bank paid a fine of €150m ($189.1m) to end an investigation over allegations the bank and its employees helped Germans dodge taxes.
Rohner urged the Swiss government to stay the course in negotiating deals with European governments.
"A withholding tax and a tax of legacy assets is the proper and sensible means to ensure tax compliance while safeguarding privacy," he said.
Swiss banking under pressure
Most finance industry representatives at the conference favoured tax deals and rejected the idea that Swiss banks would provide client information to other states.
"Changing to the automatic exchange of information is absolutely not compatible with the understanding of citizenship and government we have in Switzerland," said outgoing Economiesuisse head Gerold Buehrer.
In another speech, Swiss National Bank chairperson Thomas Jordan called for more stability and fewer changes to the banking sector after current regulatory efforts are put into force.
"In such an environment, it is hard to maintain profit margins and retain clients," he said.
Banking contributes about 10% of Switzerland's gross domestic product.
Swiss regulator FINMA lauded Credit Suisse and rival UBS for bolstering capital and cutting back on riskier activities.
"Both are on target with increasing their equity under the new requirements," which include a stricter interpretation in Switzerland of international Basel III reforms, FINMA Head Patrick Raaflaub said.
In July, Credit said it would boost its capital base by 15.3bn Swiss francs ($16bn) after a unusually sharp public rebuke from the SNB the month before.