Thursday, September 3, 2009

Oldest Swiss Bank Tells Clients to Sell U.S. Assets or Leave

Sept. 2 (Bloomberg) -- Wegelin & Co., Switzerland's oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the world's biggest economy.

U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities that may be inherited by the heirs of people who have such holdings prompted the advice from the St. Gallen, Switzerland-based bank, said Managing Partner Konrad Hummler.

"We came to the conclusion that it's a threat to our clients," Hummler, who is also president of the Swiss Private Bankers Association, said in an interview yesterday during a conference in Zurich. "It's also a threat to us as a bank because as a custodian we are an executor to the estate. We find this aspect discomforting, so we recommend selling all American securities whatsoever."

Hummler said he plans to raise the subject today at a meeting of the Private Bankers Association, which counts Pictet & Cie., Lombard Odier & Cie. and Mirabaud & Cie. among its members. Swiss banks, which manage $2 trillion, or 27 percent, of the world's privately held offshore wealth, are struggling to protect bank secrecy after the government agreed to hand over the names of 4,450 UBS AG clients to U.S. tax authorities.

Hummler said he wouldn't ask other association members to follow Wegelin's lead. Wegelin, founded in 1741, manages more than 20 billion Swiss francs ($18.7 billion) in client assets.

"Every member is free to decide and act on their own," he said.

Sept. 3 (Bloomberg) -- HSBC Holdings Plc's Swiss private bank says more rich foreigners are inquiring about moving to Switzerland, spurred by rising taxes at home and concerns about the erosion of banking secrecy for non-residents.

Switzerland's decision to increase cooperation with the U.S. and neighbors such as France and Germany on tax evasion hasn't dulled the Alpine nation's allure for those who are able to take up residence, said Alexandre Zeller, chief executive officer of HSBC's Swiss bank.

"We're not talking about thousands of people because we're talking about people with a certain wealth, but it's significant," Zeller said in an interview in Zurich. "They come above all from countries which have substantially increased taxes. There's a direct correlation between taxes and the desire of a wealthy person to want to establish themselves elsewhere."

Switzerland is home to expatriate millionaires including seven-time Formula 1 racing champion Michael Schumacher, Ikea founder Ingvar Kamprad and singer Tina Turner. Wealthy residents who don't have Swiss income can negotiate individual tax deals with regional authorities in Switzerland.

Zeller said any Swiss banking client with a tax-compliance issue in his home country has three choices: do nothing, make a voluntary disclosure, or, if rich enough, move to Switzerland.

Beginning in April, the U.K. plans to levy a 50 percent income tax on people who make more than 150,000 pounds ($244,000) a year. Julius Baer Holding AG Chairman Raymond Baer said in an interview earlier this year that his bank remains attractive to Germans faced with unpredictable taxes. Most Americans remain liable for U.S. taxes even if they live abroad.