Swiss bank Credit Suisse is being probed by the U.S. Department of Justice as part of a broader investigation into banks suspected of helping Americans evade taxes.
Credit Suisse said on Friday it had received a letter saying it was a target of a DoJ investigation concerning historical private banking services provided on a cross-border basis to U.S. persons.
In a major blow to banking secrecy that helped Switzerland build up a multi-trillion-dollar offshore banking industry, Credit Suisse's local rival UBS paid a $780 million fine in 2009 and agreed to hand over information about nearly 5,000 secret accounts held by U.S. citizens to settle U.S. charges it aided tax evasion.
When four current and former Credit Suisse bankers were charged in February with helping Americans dodge taxes, the bank said it was not a subject of the investigation and was cooperating.
Subject to our Swiss legal obligations, we will continue to cooperate with the U.S. authorities in an effort to resolve these matters, Credit Suisse said on Friday.
Offshore tax havens have come under attack in recent years as cash-strapped governments seek to boost revenues in the wake of the financial crisis, forcing countries like Switzerland to pledge to cooperate more to help hunt tax cheats.
A report from the Boston Consulting Group said wealthy U.S. individuals had pulled most of their money from Swiss private banks since 2006, in the wake of the crackdown.
Since settling with UBS, the DoJ has been conducting a broad investigation into a number of Swiss banks, bankers, and intermediaries to see if they have helped clients dodge taxes.
Companies involved in that probe include Credit Suisse, the second-largest bank in Switzerland; HSBC, Europe's largest bank; Julius Baer, a private bank based in Zurich; and Basler Kantonalbank, a Swiss cantonal bank.
Credit Suisse, which shut its U.S. offshore business in 2008/09, has always said it had tighter controls in place than UBS.
SWISS SEEK DEAL TO GET PROBE DROPPED
Switzerland and the United States have been in talks to try to reach a multibillion-dollar deal to get that investigation dropped in return for banks paying a fine, exiting undeclared offshore banking businesses for Americans, and turning over client names to the Internal Revenue Service.
Those talks have become bogged down due to Swiss insistence any deal leave Swiss bankers free from prosecution in the United States, sources said last month.
Vontobel analyst Teresa Nielsen said Switzerland and the United States were likely to continue negotiations along with the DoJ investigation of Credit Suisse.
Currently, it is difficult to say whether this will lead to a legal case and a fine against Credit Suisse, Nielsen said.
Credit Suisse shares were down 1.6 percent at 1228 GMT, underperforming a 0.1 percent fall in the European banking sector. Julius Baer shares were flat.
A spokesman for Julius Baer, which agreed in April to pay 50 million euros to settle a German tax investigation, said the bank had not been contacted by the DoJ so far.
A spokesman for Basler Kantonalbank said while the bank had not received a formal letter from the DOJ, it had recently held informal talks and was available to for further discussions.
Jay Rubinstein, Zurich-based partner and head of U.S. tax at law firm Withers, said: It is a shame the U.S. is focusing on the Swiss institutions, as the present trend in Switzerland is toward compliance and transparency.
But it is not surprising that the U.S. justice department is focusing its efforts on institution(s) with presence in the United States, given the leverage.
In June, the U.S. Internal Revenue Service's Deputy Commissioner for Services and Enforcement Steven Miller said it planned to move against one or more banks in the next month or so.
(Additional reporting by Silke Koltrowitz; Writing by Emma Thomasson; Editing by Will Waterman and Dan Lalor)