Swiss lawmakers bow to bankers urging UBS settlement

Swiss lawmakers, bowing to pressure from bankers representing 7.6 per cent of the nation’s gross domestic product, are poised to back the government’s settlement with the US over tax evasion resulting from a tradition of bank secrecy.

Three of Switzerland’s four largest political parties are likely to support the deal involving UBS AG when it comes to a vote in June, giving the government a majority in parliament, according to interviews with party leaders.

The government is seeking parliamentary approval for the agreement, which requires Switzerland to turn over details on as many as 4,450 UBS accounts to the Internal Revenue Service, to circumvent a court ruling that the deal violated Swiss law. Failure to get lawmakers’ backing may reopen the lawsuit against UBS and threaten the Zurich-based bank’s operations in the US as the IRS seeks to crack down on tax evasion.

“It is unthinkable what would happen if parliament doesn’t approve the deal, and lawmakers know that,” said Daniel Kuebler, a political science professor at the University of Zurich. “If parliament doesn’t approve it, the US could threaten to withdraw UBS’s banking licence.”

The Christian Democrat People’s Party backs the deal, said leader Christophe Darbellay in an interview on March 17. While the Swiss Social Democratic Party has linked its support to a tax on bankers’ bonuses, Micheline Calmy-Rey, the party’s foreign minister, has said a settlement is “crucial.” Stefan Brupbacher, secretary general of FDP.The Liberals, said his party will likely approve the settlement.

“Our party hasn’t officially decided yet, but most probably we will approve the deal,” he said yesterday in an interview. “If the deal was rejected, it would not only hurt the banks, but also the country. And when voting, we will keep that in mind.”