US wins UBS secrecy battle

The US has finally reached an agreement with Bern over Swiss banking secrecy laws. UBS is to reveal the 4,450 names of US citizens who have accounts with it in a clampdown on possible tax evasion. The accounts between them contain $18bn and will now be examined closely by the US Internal Revenue Service.

IRS Commissioner Doug Shulman said of the accord "I believe this agreement gives us what we wanted - access to information about those UBS accountholders most likely to have been involved in offshore tax evasion."

The out-of-court agreement is the culmination of a three-year investigation by the US that has whipped up a major diplomatic storm between the two countries and brought its biggest bank UBS to book. UBS will now have to hand over banking details within 12 months and the focus will move to other major Swiss banks like Credit Suisse and Julius Baer.

UBS's US wealth management business had $20bn in funds, earning the firm $200 in charges, however since the enquiry was launched many clients have withdrawn their money from the unit. Initially the bank agreed to pay a fine of $788m and hand over details of 250 of its customers' accounts, but the US authorities pressed for more details.

After the announcement of the deal the Swiss government said it was to sell off its nine per cent stake in UBS, currently valued at over $5bn. It gained the shareholding as part of a rescue package extended to the bank when it had problems during the credit crunch last year.

WHAT THEY ARE SAYING:Jay Krause, partner at international law firm Withers, in the Guardian: "The IRS scored a major victory in the ever-expanding international campaign against tax avoidance. The decision will provide a useful roadmap for obtaining US taxpayer information from other Swiss financial institutions and will likely be tailored to target institutions in other jurisdictions."

Charles Falk, a New Jersey lawyer representing 35 UBS clients, on Bloomberg: "It gives the US what it wants, which is names. It gives the Swiss what it wants, which is an affirmation of bank secrecy. It gives UBS the ability to now go out and deal with its other issues, which are many." ·