UBS not to pay fine in US tax settlement

Spokesmen for the Swiss justice and the foreign ministry declined to comment on the reports. UBS was not immediately available.

The US government and UBS struck a deal to settle a dispute over tax evasion and Switzerland’s bank secrecy on Friday,heading off a showdown that had threatened to sour relations between the US and Switzerland.

The main sticking point was that US authorities wanted UBS to disclose the names of 52,000 wealthy American clients suspected of using the bank to evade taxes — a demand that tested Switzerland’s vaunted tradition of bank secrecy.

The parties still have to work out details,which are expected by Friday,when a new pretrial status conference is scheduled. The court trial against UBS has been reset for Aug 10,but would be called off if a final deal is signed.

Switzerland’s top-diplomat Michael Ambuehl told the NZZ am Sonntag,the deal would not violate Swiss law.

“The Swiss legal system is maintained,because the US have promised to act on the basis of the current agreements and to ask for legal assistance again,” said Ambuehl,who is state secretary in the foreign ministry.

Swiss justice minister Eveline Widmer-Schlumpf,whose ministry is in charge of the negotiations together with the foreign ministry,said in a newspaper interview the parties had still to agree on important details.

“I am optimistic,that an agreement can be reached,” she told Swiss paper Sonntag.

But she warned that worries of a failure were not unfounded.

“There are still details to be cleared,which are of importance to us,” she said. “Should we not reach an agreement,which is in line with our Swiss laws,a deal would be put into question.”

IN PRINCIPLE

Under the settlement,described as an “agreement in principle” expected to be finalized by next Friday,UBS is likely to reveal far fewer than 52,000 client names,but would include the biggest accounts,a US government source had tsaid.

UBS Chairman Kaspar Villiger said earlier this month the tax talks were focusing on client names rather than on a potential payment by UBS.

A US government source who has followed the case closely had downplayed talk of a financial penalty.

“I don’t think there’s going to be a fine component at all,” the source,who spoke on condition of anonymity,had tsaid on Friday.

UBS,which is struggling to recover from the subprime crisis after posting the biggest annual loss in Swiss corporate history last year,agreed in February to pay $780 million to settle separate but related criminal tax fraud charges.

The bank will publish second quarter results on Tuesday and analysts expect it to report a loss of some 1.1 billion Swiss francs ($1.01 billion).