UBS warned that clients may
withdraw up to CHF40bn ($41bn) because of renegotiated double-tax
treaties between Switzerland and other European countries,
including Germany and the UK.
UBS, which has only just stemmed
outflows of client money, said clients from Germany, France, Italy,
Austria and Britain made net withdrawals worth CHF20bn over 2010 to
date (see chart, below).
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As much as CHF15bn-CHF40bn “are
still at risk as a result of changes in tax regulations,” said
Juerg Zeltner, head of UBS Wealth Management, speaking during the
annual UBS Investor Day meeting in London.
UBS had CHF320bn of invested client
assets in Europe at end-September and CHF960bn globally.
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By GlobalDataOutflows lower than
expectations
The estimate of potential outflows
were lower than some analysts had been expecting. The CHF40bn
figure is only about 5% of total assets under management and the
sort of figure UBS had been losing every quarter in 2008, said
Helvea analyst Peter Thorne.
Thorne added that UBS could “easily
survive such a loss”.
UBS insists it can cope with the
European tax clampdown because it is “well-positioned” in
Asia-Pacific, emerging markets and the ultra high net worth
segment, where it ranks as the leading private bank.
Switzerland has inked agreements
with Germany and Britain to introduce what is understood to be a
withholding tax on interest and income derived from nationals of
those two countries held in the Alpine state.
But Switzerland has resisted
pressure for the automatic exchange of information on clients, thus
preserving Swiss banking secrecy.
At the investor day, UBS reaffirmed
its medium-term goals, saying that it remained on track to attain
an annual pre-tax profit of CHF15bn in the next three-to-five
years.
US drops tax
case
UBS also got upbeat news when the
US Internal Revenue Service (IRS) dropped its demand for the
identities of Americans holding offshore bank accounts at the
bank.
IRS Commissioner Douglas Shulman
said his agency’s ‘John Doe’ summons against UBS and various
investigations has prompted voluntary disclosures by 18,000
Americans, including thousands with accounts at other banks, since
it began in early 2009.
About 3,000 Americans have come
forward in the year since the IRS ended an official programme to
grant some leniency for voluntary disclosures, Shulman said in a
statement.
The agency has collected on average
$200,000 in taxes, penalties and interest per case, Shulman
added.
The IRS started its investigation into UBS in 2008 after a
former UBS banker, Bradley Birkenfeld, pleaded guilty to
conspiracy, claiming the bank helped wealthy Americans conceal
$20bn in assets and evade income tax laws.
