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Credit Suisse agrees to tax deal with Germany

This Dec. 9, 2008, file photo shows a building of Credit Suisse bank in the Brunau district of Zurich, Switzerland. Swiss bank Credit Suisse said Monday, Sept. 19, 2011, it has agreed to a settlement to prevent its staff from being prosecuted in a German tax evasion case. (Gaetan Bally/AP)


Credit Suisse has become the second Swiss bank to agree to an out-of-court settlement with German prosecutors to drop investigations into whether the bank and its employees had assisted in tax evasion.

The group said on Monday it would make a €150-million ($205-million U.S.) payment, to be taken as a charge in the third quarter. Earlier this year, Swiss private bank Julius Baer reached a €50-million deal to avoid a similar German probe.

"The entire proceedings are to be resolved," said Credit Suisse.

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"Credit Suisse welcomes this outcome. A complex and prolonged legal dispute has been avoided, with an agreed solution that provides legal clarity."

The group had been the most prominent of a handful of Swiss banks to have come under investigation in Germany.

Switzerland's neighbour is an important private banking market for many Swiss banks. Credit Suisse runs operations in 12 German cities and employs about 750 people in the country.

Credit Suisse had been under investigation after raids on some of its premises and accusations against some bankers. The bank denied the accusations.

The settlement comes on the heels of last month's deal between Bern and Berlin to regularize undeclared accounts held by rich Germans in Switzerland and levy tax on future income.

In exchange, Germany dropped demands for an automatic exchange of tax information – being spearheaded by the European Commission in Brussels – and indicated it would improve market access for Swiss banks.

No precise figures exist on how much money wealthy Germans hold in Swiss bank accounts, let alone how much is undeclared. Some estimates put the total at €150-billion and assume at least half is undeclared.

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Switzerland has said it wants in future only to attract foreign money that is declared in the owners' home countries. Bern and the powerful Swiss bankers association have been trying to implement that strategy, but face considerable difficulties during the transition.

In the case of the deal between Berlin and Bern to resolve the issue of so-called undeclared "legacy" accounts, Germany's opposition Social Democrats have threatened to block the legislation in the Bundesrat, the upper chamber of the German parliament, where chancellor Angela Merkel's coalition government has lost its majority.

Shares in Credit Suisse were 5.1 per cent lower in early Zurich trading.

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