ZKB CEO Says Bank Expects Talks With U.S. on Tax Probe This Year
Chief Executive Officer Martin Scholl said in an interview in Zurich today that he is waiting to hear from U.S. authorities after the Justice Department last month extracted a guilty plea and an agreement to pay $2.6 billion from Credit Suisse Group AG (CSGN), the first global bank in a decade to admit to criminal wrongdoing in the U.S.
The Credit Suisse deal sets a new standard for punishment in the U.S. crackdown on offshore tax evasion and frees up tax prosecutors to go after other banks on their list. ZKB is among about a dozen Swiss financial firms, including Julius Baer Group Ltd. (BAER) and Pictet & Cie. Group SCA, seeking to strike individual agreements to avoid or defer prosecution in Justice Department probes over whether they helped Americans hide money from the Internal Revenue Service.
ZKB has received no word from the U.S. on when talks might begin, Scholl said. “We expect it will be at some point this year.” The bank is the biggest of Switzerland’s publicly owned regional banks, with about 150 billion Swiss francs in assets at the end of 2013.
Potential Fines
Jacques de Saussure, senior partner at Pictet, Switzerland’s biggest closely held private bank, is optimistic about reaching a deal, according to Neue Zuercher Zeitung. It will be “some time” before the criminal probes are resolved, the Swiss newspaper quotes him as saying in an interview published today.
“We’re cooperating fully and within the framework of what’s legally possible and hope this will be recognized by U.S. authorities,” he said, according to NZZ. Swiss law prohibits banks from transmitting information about their clients to third parties.
As for potential penalties, Scholl said the size of a possible fine would be difficult to determine based on the $2.6 billion penalty for Credit Suisse.
ZKB Indictments
In December 2012, three current or former ZKB employees were indicted on charges of helping U.S. clients hide more than $420 million from the IRS.
ZKB’s priority is to resolve all outstanding issues in private banking by 2015, Scholl said at a seminar. “As soon as the dialog continues, we are ready,” he said, promising full cooperation.
Another 100 or so Swiss banks and 43,000 U.S. taxpayers have applied to the Justice Department to avoid prosecution by disclosing in detail how the evasion worked. A third group of lenders in the disclosure program is seeking to avoid fines by showing that their American clients came clean with the IRS.
“We hope this issue will be solved soon, as soon as possible, but the agenda-setting isn’t on this side of the Atlantic Ocean,” Scholl said.
