Switzerland’s oldest bank, Wegelin & Co., is requiring wealthy clients to sell their U.S. assets or leave the bank, Bloomberg reports.
Wegelin’s worry is that new rules will burden investors with tax payments to Uncle Sam.
The U.S. government has proposed more stringent reporting regulations for banks whose clients purchase American stocks and bonds. Also worrying Wegelin are estate taxes that may be owed by heirs of people who hold U.S. assets.
“We came to the conclusion that it’s a threat to our clients,” Wegelin Managing Partner Konrad Hummler told Bloomberg.
“It’s also a threat to us as a bank because as a custodian, we are an executor to the estate. We find this aspect discomforting, so we recommend selling all American securities whatsoever,” says Hummler, who also is also president of the Swiss Private Bankers Association.
Hummler plans to raise the subject at the next meeting of the Private Bankers Association, but said he wouldn’t ask other association members to follow Wegelin’s example.
“Every member is free to decide and act on their own,” he told Bloomberg.
Swiss banks really got scared about secrecy after the government agreed to give U.S. tax officials the names of 4,450 UBS clients.
Some experts say new U.S. rules threaten the offshore banking industry as a whole.
"The entire offshore banking model seems to be dead," Teodoro Cocca, a professor of wealth management at Johannes Kepler University in Austria, tells Reuters.
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