Skip to main content

The Globe and Mail

Swiss banks raise the white flag over secrecy

Pity the poor Swiss banks. Global powerhouses UBS and Credit Suisse Group emerged battered and bleeding from the global financial meltdown. Steep losses forced them to make deep cuts and abandon some of the more lucrative global trading and investment activities that got them into deep trouble in the first place.

And now the main remaining trump card for both the publicly traded giants and the country's more than 300 private banks – namely, the guaranteed anonymity afforded by a secret Swiss bank account – is heading the way of the Fribourg cow.

After resisting pressures for years from the U.S. and hard-pressed EU governments seeking to unearth billions of dollars hidden in foreign accounts, the Swiss have bowed to the inevitable and signed on to a global convention to share tax-related information with other governments. This would include such useful information to tax collectors as bank balances and income from investments and asset sales.

Story continues below advertisement

As the world's largest banking haven, with more than $2-trillion (U.S.) in assets under management, Swiss support is essential for any effective crackdown on tax cheats.

"It's clearly the end of bank secrecy abused for tax purposes," Pascal Saint-Amans, tax director with the Organization for Economic Co-operation and Development, declared after Switzerland and Singapore, another major global financial centre, took the pledge.

The move comes amid reports that Credit Suisse is set to resolve a U.S. tax evasion case with a settlement that could exceed the $1-billion (U.S.) set aside by the bank to deal with such litigation. Credit Suisse set up a separate unit last year to hold the assets involved and safeguard the parent company from the fallout. It's unclear whether the deal would include immunity from criminal charges or a guilty plea.

To avoid such a fate, UBS paid a penalty of $780-million back in 2009 and handed over the names of more than 4,000 clients. But as many as a dozen other Swiss banks remain under the microscope of the U.S. Justice Department, which is smarting from justified criticism that financial institutions have managed to escape prosecution for breaking the law, largely by clinging to the canard that the loss of public confidence would trigger a dangerous bank run and damage the fragile economic recovery. Not to mention their own fragile health.

The Swiss had previously joined about 60 other jurisdictions in agreeing last fall to an exchange of tax information when requested by another government. To ensure that their institutions didn't get blindsided by tougher regulations than they were prepared to implement, Swiss officials participated in devising the new global standard. By making the information exchanges automatic, they will tighten the screws on tax dodgers – but not before 2017.

Assorted autocrats, oligarchs, money launderers, drug dealers, terrorists and wealthy deadbeats, ever sensitive to their tenuous legal condition, are already looking for new havens to shelter their cash. Don't worry, though. The Swiss won't need to hold any tag days for the Zurich gnomes just yet.

To ensure that it can retain part of this growth business, the government ensured that banks would not have to hand over any information on clients that falls outside the tax realm. Nor will other governments be free to pass on what they learn to police, prosecutors, intelligence agencies or divorce lawyers, all of whom would love to know exactly who is stashing what in those numbered accounts.

Story continues below advertisement

"The banks in Switzerland are willing to adopt the automatic exchange of information along with other financial centres, provided that the exchanged information is only applied strictly for tax purposes," the Swiss Bankers Association said.

Well, at least it's a start.

Report an error Licensing Options
About the Author
Senior Economics Writer and Global Markets Columnist

Brian Milner is a senior economics writer and global markets columnist. In a long career at The Globe and Mail, he has covered diverse business beats, including international trade, the automotive industry, media, debt markets, banking and the business side of sports. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at