UBS existence at stake

GooBai · **Joined:** Mon May 19, 2008 2:27 am **Posts:** 334

Will Switzerland review its safe haven status?

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UBS has agreed to pay US authorities US$780 million (S$1.19 billion) and hand over customer details to settle charges of tax fraud in the United States that threatened the very existence of Switzerland's biggest bank.

The settlement rocked Switzerland's business establishment on Thursday after the Swiss regulator revealed that the case had not only jeopardised UBS but also the country's fabled financial stability.

The Swiss Financial Markets Supervisory Authority (FINMA) ordered the country's banking flagship to reveal the account details of customers targeted by the US justice investigation, raising questions about the future of banking secrecy.

US court documents revealed shell accounts, which UBS used to justify evading its reporting obligations and help US taxpayers to continue to conceal their identities and assets from the Internal Revenue Service.

UBS is bound by local legal requirements with its US business as well as by taxation agreements between the United States and Switzerland that cover tax fraud and oblige the bank to withhold income taxes on some US clients with foreign securities.

The US Justice Department said in a statement late on Wednesday that UBS 'has entered into a deferred prosecution agreement on charges of conspiring to defraud the United States by impeding the Internal Revenue Service (IRS)'.

'As part of the deferred prosecution agreement and in an unprecedented move, UBS, based on an order by the Swiss Financial Markets Supervisory Authority (FINMA), has agreed to immediately provide the United States government with the identities of, and account information for, certain United States customers of UBS's cross-border business,' it said.

Swiss newspapers reported on Thursday that about 250 to 300 customers were involved.

UBS's agreement 'to pay US$780 million in fines, penalties, interest and restitution' was accepted earlier on Wednesday by a US federal judge in Florida.

The US government would recommend dismissal of the charges because of the bank's 'willingness to acknowledge responsibility for its actions and omissions, its cooperation and remedial actions', provided UBS continues to cooperate, the Justice Department said.

UBS chairman Peter Kurer said in a statement: 'UBS sincerely regrets the compliance failures in its US cross-border business that have been identified by the various government investigations in Switzerland and the US, well as our own internal review.'

'We accept full responsibility for these improper activities,' he added.

UBS announced in July that it was halting its offshore banking services for US citizens in light of the probe.

But the official Swiss financial watchdog revealed even deeper implications of the criminal charges first brought by a Florida court against a former UBS banker last spring.

'Such charges could have had drastic consequences for UBS and its liquidity situation and ultimately put its existence at risk,' FINMA said in a statement.

A settlement helped 'avert the drastic consequences such charges would have for UBS and the stability of the Swiss financial system,' it added, reprimanding the bank and banning it from cross-border business with US clients in the future.

UBS posted an annual loss of US$17 billion in 2008 and received state aid package after it was battered by the financial crisis and credit squeeze.

Under Swiss banking secrecy law, banks in Switzerland are prohibited from revealing any information to authorities or any third parties about their clients, except in cases involving recognised criminal investigations.

The decision to hand over client details sparked a debate in Switzerland about the future of banking secrecy.

The Neue Zurcher Zeitung newspaper described the move as a 'capitulation' to US pressure and said the country's financial services industry 'had its back to the wall'.

Swiss business lawyer Carlo Lombardini said the outcome marked 'the failure of the policy followed by federal authorities for 20 years'

http://www.straitstimes.com/Breaking%2B ... 40484.html

Poor Man · **Joined:** Sun Jun 03, 2007 10:47 am **Posts:** 237

Singapore sovereign fund has invested heavily into UBS. Will Singapore's status as aspiring safe haven being threatened and beseiged?

Resilience Package cheaper than UBS, Citi stakes

Quote:

The Singapore government has come out with a bold 20.5 billion Singapore dollar (S13.6 billion) Resilience Package to save jobs and fight the city state’s deepest recession since independence in 1965.

The massive stimulus package unveiled as part of this year’s budget today along with a corporate tax cut from 18 percent to 17 percent is unprecedented in Singapore’s history. It amounts to eight percent of the gross domestic product, reports Bloomberg.

For the first time the government is dipping into official reserves to draw 4.9 billion Singapore dollars for two schemes – Jobs Credit, giving employers cash grants to retain workers, and the Special Risk-Sharing Initiative, to stimulate bank lending.

The stimulus package, which will create an 8.7 billion Singapore dollar overall budget balance deficit in the financial year 2009, is one of the largest yet announced by Asia-Pacific governments, reports AFP.

But the 20.5 billion Singapore dollar Resilience Package falls billions short of Singapore’s total investments in the troubled banking giants, Citigroup and UBS.

The Singapore sovereign wealth fund, Government of Singapore Investment Corporation (GIC) had invested about 11 billion Swiss francs (about $9.75 billion) in the Swiss bank UBS in December 2007 and $6.9 billion in US bank Citigroup in January 2008.

GIC manages Singapore’s foreign reserves.

This shows an international banking giant needs a much bigger investment than needed to stimulate an economy of 4.84 million people.

Singapore’s other sovereign wealth fund, Temasek Holdings, has invested $8.3 billion in another troubled US bank, Merrill Lynch, AFP reported in September.

GIC chief investment officer Ng Kok Song last September acknowledged that GIC had suffered some paper losses from its investment in UBS. GIC is also believed to have suffered some paper losses from its investment in Citi, the Straits Times reported at the time.

Singapore Finance Minister Tharman said in his Budget speech today:

The Resilience Package will not get us out of the recession, as long as the global economy continues to contract. But it will help avert an even sharper downturn, and more lasting damage to the economy.

The Government will keep a close watch on the global situation and its impact on Singapore. We remain ready to undertake further measures if necessary over the course of the year and the next few years.

No doubt the government will do just.The 20.5 billion Singapore dollar Resilience Package includes 5.1 billion Singapore dollars to save jobs, 5.8 billion Singapore dollars to stimulate bank lending, 2.6 billion Singapore dollars to support households, another 2.6 billion Singapore dollars for business grants and tax measures, and 4.4 billion Singapore dollars to develop infrastructure and spend on education and health care.

As part of the package comes into effect in March, it will increase the budget deficit to 2.2 billion Singapore dollars or 0.8 percent of the GDP for the current financial year 2008, the minister said. The overall budget balance deficit will increase to 8.7 billion Singapore dollars or 3.5 percent of the GDP in the new financial year 2009 after transfers to endowment and trust funds and contributions from Net Investment Returns, he added.

The government also cut corporate taxes for the second time in three years. Cut to 18 percent last year, now the maximum tax rate payable by companies will be 17 percent.

Hong Kong last year lowered its company tax rate by 1 percentage point to 16.5 percent.

http://www.pressrun.net/weblog/2009/01/ ... deals.html

GooBai · **Joined:** Mon May 19, 2008 2:27 am **Posts:** 334

Poor Man wrote:

Singapore sovereign fund has invested heavily into UBS. Will Singapore's status as aspiring safe haven being threatened and beseiged?

Resilience Package cheaper than UBS, Citi stakes

The Singapore government has come out with a bold 20.5 billion Singapore dollar (S13.6 billion) Resilience Package to save jobs and fight the city state’s deepest recession since independence in 1965.

The massive stimulus package unveiled as part of this year’s budget today along with a corporate tax cut from 18 percent to 17 percent is unprecedented in Singapore’s history. It amounts to eight percent of the gross domestic product, reports Bloomberg.

What has Singapore's investments in UBS got to do with it achieving "safe haven" status???I think the UBS fiasco will not "threaten" but will present opportunities for Singapore's wealth management industry.

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UBS existence at stake

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