Swiss government to dump UBS stake
The Swiss government apparently wants to get as far away from UBS (NYSE:UBS) as possible now that the bank has made a deal to turnover the names of 4,450 Americans who may have used the firm to dodge taxes.
The Swiss put a good face on their decision to dump the country's 9 percent interest in the bank, but it did not fool anyone. The government said that the bank was stable enough for the government to exit. Some of its investment in the firm was to bolster the bank's balance sheet during the credit crisis.
The Swiss authorities now have a hard decision to make. The US government will come after other banks based in the small country, hoping to use the UBS deal as a precedent to get names of other Americans who could be hiding money in the Swiss financial firms. The Swiss may decide that it is a conflict of interest to own shares in banks whose right to keep their client's names secret may rely on the government's willingness to fight US authorities.
The Swiss now have to decide whether they are going to stand up for their financial "way of life" which is one that has let private clients from all over the world keep money anonymously in numbered accounts. Tax authorities around the globe now want details on those secret deposits.
The open question now is whether the Swiss government wants out of UBS so that it can defend its banking system and claim that it has no financial interest in the outcome or does it want to walk away from its traditional banking practices and let the financial firms fend for themselves?
Douglas A. McIntyre is an editor at 24/7 Wall St.