Switzerland's delivery of UBS client data to U.S. tax officials has been delayed after the Swiss lower house rejected a Swiss-U.S. deal to solve a tax dispute, triggering a new parliamentary debate.
Tuesday's last-minute snub by the main arm of parliament came after a vote in favor of the deal by the upper house last week, meaning the two houses will have to try and agree a common text by the end of next week.
Even if the Swiss parliament were to fully support the text of a deal, there is still the question of whether the agreement will be put to a referendum, a scenario the lower house supported on Tuesday.
(A full rejection of the deal) would lead to uncertainty for Switzerland as a place to do business. This would be poison for the economy, Christophe Darbellay, head of the centrist Christian Democrat party, told Reuters after the vote.
We now have to find our way out of this crisis and ... a sensible solution, Darbellay added.
Washington agreed on August 19 2009 to drop tax evasion charges against UBS after Berne promised it would transfer by the end of August this year bank details of 4,450 U.S. clients of UBS, a move which would be in breach of Swiss bank secrecy laws.
A Swiss court in January duly blocked the data transfer, forcing Berne to bypass the ruling with a legal patch that requires parliamentary approval by both houses and risks delaying the sharing of bank data beyond the August deadline.
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The lower house's vote against the deal is another headache for the government, which has struggled to win political support for a deal many in Switzerland see as a capitulation to the United States to get UBS, the country's largest bank, off the hook.
The U.S. authorities could launch a fresh tax case against UBS if the Swiss fail to deliver the client data in time.
What do you want to achieve with that (rejection)? Wouldn't it be in the interest of our economy ... when we could put an end to this painful story, Justice Minister Eveline Widmer-Schlumpf said in a final appeal ahead of the vote.
UBS spokesman Serge Steiner said the world's second-largest wealth manager had taken notice of the vote.
Key to the vote against the deal was a decision by the right-wing SVP party, Switzerland's largest, to reject it after an 11th-hour change of heart as it failed to win clear support for its campaign against new taxes on bankers' bonuses.
The SVP is also supporting a referendum on the deal that would delay any accord's entry into force by up to a year.
There is no set deadline (for agreeing on a new text), but the two houses would have to work it out by the end of next week at the latest, said parliament spokesman Mark Stucki.
But if they approve a referendum, Switzerland would not be able to deliver the data on time.
The United States has accused UBS of helping rich Americans hide some $20 billion of untaxed money in secret accounts. The probe came while the bank was already weakened by $50 billion of writedowns on toxic assets which put its survival at risk.
Since the Swiss courts cast uncertainty on the deal, U.S. officials have maintained they expect the Swiss to live up to their end of the bargain.
The Swiss government has repeatedly said an agreement is the only way to end the prolonged UBS tax dispute, a distraction for Chief Executive Oswald Gruebel as he tries to rebuild the hard-pressed wealth manager.
Shares in UBS were down 3.1 percent at 1009 GMT, extending earlier losses following parliament's vote and against a 1.5 percent fall in the STOXX Europe 600 banking index <.SX7P> (Additional reporting by Kim Dixon in Washington; Editing by David Holmes)