The UBS crisis and the end of banking secrecy
Zurich, Bern, Washington
Key figures: Hans-Rudolf Merz, Eveline Widmer-Schlumpf
Sources: Report of the Control Committees, 2010
Banking secrecy. The Banking Act of 8 November 1934 makes breaching banking secrecy a criminal offence. For decades the protection of client data, together with political stability and the franc, draws capital to Switzerland from all over the world, including much that was hidden from the tax authorities of other countries.
The rescue of UBS (October 2008). With the American mortgage crisis UBS suffers huge losses. On 15 October 2008 the Confederation and the National Bank decide on a rescue, announced the next day: the Confederation subscribes a convertible loan of 6 billion francs and the National Bank undertakes to take over illiquid assets worth up to 60 billion dollars. In 2011 parliament adopts rules for banks that are “too big to fail”.
The clash with the United States (2009). The American authorities accuse UBS of having helped US clients evade taxes. On 18 February 2009 the supervisory authority FINMA orders UBS to hand over the data of some 250 clients; in August an agreement between the two governments leads to the transfer of data on about 4,450 accounts. On 13 March 2009 the Federal Council adopts the OECD standard on administrative assistance in tax matters.
Automatic exchange (2017). International pressure continues in the following years. Switzerland joins the automatic exchange of tax information: from 2017 banks collect the data of clients resident abroad, which from 2018 are sent to their countries. Banking secrecy still applies to Swiss residents, but the financial centre changes its model: from shelter from tax to the management of declared wealth.
The entrance to the UBS headquarters on Paradeplatz in Zurich, 2010
Photo Roland zh, via Wikimedia Commons, CC BY-SA 3.0
Paradeplatz in Zurich with the headquarters of Credit Suisse and UBS, Switzerland’s two big banks, 2019
Photo Ank Kumar, via Wikimedia Commons, CC BY-SA 4.0