Swiss banks to lift veil for US

Switzerland is trying to save its banks from heavy punishment in the US for helping wealthy tax cheats. Its strategy is to sidestep its famed secrecy laws to let bankers make disclosures to US prosecutors.

A bill is being considered that would allow Swiss banks to release information to US authorities in the hope of avoiding threatened criminal charges - though the banks nevertheless face fines likely to total billions of dollars.

Bankers welcomed the prospect of an exit from years of legal wrangling that has already cost them dearly and driven one bank out of business. But they were disappointed that Swiss ministers had failed to obtain more clarity from Washington on what settlements they might now expect to be imposed on them. Opposition parties in parliament could yet block the passage of the bill.

Five months after US action over tax evasion led to the closure of Switzerland's oldest private bank, and with formal investigations under way into some of its biggest institutions, the Swiss government wants a compromise to end threats of criminal prosecutions.

It insists that banks will still not be allowed to hand over client names - which are protected by its treasured secrecy law of 1934.

But the new proposal, valid only for a year, would allow them to hand over so much information on customers' behaviour that US officials should be able to identify Americans who have used Swiss bank accounts to evade taxes.

"If banks were not authorised to cooperate with the US authorities, the initiation of further criminal investigations or charges concerning banking institutions could not be ruled out," the Swiss finance department said.

Swiss analysts were divided. Some called it a sensible way out of a problem that meant banks found themselves barred by Swiss law from cooperating with US prosecutors, whereas others condemned the blow to secrecy as "blackmail".

UBS, the country's biggest bank, was forced in 2009 to pay a $780-million fine and deliver the names of more than 4000 clients to avoid indictment in the US.