Private Bank Settles Tax Dispute With U.S.

A third bank with its base in Switzerland has settled the long-running tax dispute with the U.S. government. The deal didn't come cheap for the bank.

The list of category 1 banks, companies in other words against which the U.S. Department of Justice (DoJ) launched criminal investigations on suspicion of tax offenses, is thinning out.

The U.S. authorities agreed to close its probe against HSBC Private Bank Switzerland that focused on tax offenses by its former U.S. clients following a settlement agreement, the bank said.

Provision Covers Payment

HSBC Private Bank Switzerland agreed to a Deferred Prosecution Agreement (DPA), which included a payment of $192.35 million, to settle the ongoing dispute. The bank had taken a provision covering that sum. The deal includes offenses committed from the beginning of the century through 2010.

The payment is one of the bigger sums agreed by any Swiss institute. Basler and Zuercher Kantonalbank for instance paid $60 and $100 million to the U.S., while Mizrahi-Tefahot in March agreed to a payment of $195 million. In August 2019, LLB Switzerland settled for $10.7 million.

Three Companies Left on List

The long-running dispute began with a fine for UBS in 2009 of $780 million. Credit Suisse, the No. 2 in Switzerland, settled for $2.5 billion, the biggest sum paid by any Swiss-based institute in this chapter of Swiss banking.

The last companies left to yet reach a settlement are Pictet, Rahn+Bodmer and Bank Hapoalim, whose Swiss business has been taken over by J. Safra Sarasin.