“The bill adopted by the Federal Council authorises banks to cooperate with the US authorities and to make available the information necessary to safeguard their interests,” a statement from the Swiss government said.

“At its meeting today, the Federal Council approved a corresponding bill for the attention of parliament which enables banks to agree with the US Department of Justice to put the past to rest,” it said yesterday.

In a comment today,  Dr Pete Hahn of Cass Business School in London said Swiss banks may be able to use their more conservative capital requirements as a competitive edge going forward, rather than rely on historic bank secrecy.

“The Swiss invented and later grew to dominate off-shore private banking based on three benefits other centres could only partially offer: country stability, secrecy and tax advantages.  While these advantages have diminished, Swiss bankers may not be too concerned just yet.  The so-called Swiss Finish, requiring Swiss banks to maintain virtually double the capital base reserve for losses compared to Basel III requirements, might end up being their new competitive advantage in a market that is likely to remain more concerned about wealth preservation than performance,” Dr Hahn said.

Since 2009, when UBS, Switzerland’s biggest bank, settled civil and criminal charges over claims that it aided tax evaders, Swiss banks have come under pressure to disclose information, but they are banned by strict Swiss laws dating back to 1934 to divulge account details. Meanwhile a number of Swiss banks have ceased to provide offshore banking to US citizens. Among the most dramatic casualties of change has been Wegelin, Switzerland’s oldest bank (founded in 1741), which in January pleaded guilty in New York City to conspiring to help conceal client money from the Internal Revenue Service.

Policymakers on both sides of the Atlantic have sought to resolve the issue, with a view to a broad deal that gives protection to Swiss banks in exchange for transferring information under certain conditions.

The US, meanwhile, has passed legislation such as FATCA – the Foreign Account Taxation Compliance Act – designed to crack down on expat US citizens who might be evading taxes. The US pressure on tax evaders and other jurisdictions has drawn accusations of hypocrisy, however. For example, the state of Delaware arguably counts as an offshore tax haven for certain types of client.

Statement

The Swiss government’s statement continued: “This includes in particular information about business relationships concerning US persons and details on people who were involved in the US business of the respective banks. Client data, including account information, is not covered by the authorisation. The disclosure thereof will occur exclusively within the scope of administrative assistance procedures based on a valid double taxation agreement.”

The issue is urgent, the statement said, because US authorities have indicated they are not willing to wait for longer before taking further action. As a result, the legislation is to be voted on in the summer.

“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 uncertainty for the financial centre would continue to exist,” the statement said.