HSBC Holdings Plc’s Swiss private bank last September asked clients and independent money managers to surrender their right to banking secrecy protection in order to keep securities invested in 28 countries.

In countries where rules demand investor disclosure, HSBC asked for permission to hand over the names of clients that want to keep their investments, the Geneva-based bank said in a letter that it e-mailed to Bloomberg News. Those countries include Brazil, China, India and Greece.
Credit Suisse Group AG is also asking clients holding French securities to let it release their details to France’s financial regulator.
While both banks are seeking to comply with securities regulations, the moves may increase investor concern after Swiss banking secrecy came under attack from the U.S. and Europe this year.
“It might be a way to undermine the secrecy system,” said Christian Stark, a banking analyst at Credit Agricole Cheuvreux in Zurich. “If Switzerland was suddenly inundated with insider trading requests, it would be obvious what’s behind it.”
Under Swiss law, bankers can be fined or jailed for disclosing a client’s identity without permission.
“The main objective of this document is to obtain the prior consent of the client to renounce Swiss banking secrecy before investing in regulated markets which demand the disclosure of his identity,” HSBC said in the letter. Regulator Requests
HSBC also “strongly recommends” that independent money managers renounce banking secrecy for clients who want to invest in the U.S., Germany, the UK, Russia, Singapore and seven other markets. Regulators in those countries can request investor identities, the bank said.
Credit Suisse, in a June 24 letter, gave clients until Sept. 1 to respond, or their French positions would be sold. Switzerland’s biggest bank by market value has already taken similar steps with securities in Norway, South Korea and Taiwan, as well as France.
Switzerland, which treats tax evasion as a civil offence and tax fraud as a crime, agreed in March to cooperate with foreign tax authorities, lifting the anonymity of banking secrecy where there is evidence of either. It already waives banking secrecy for criminal investigations.
The U.S. Internal Revenue Service is trying to force UBS AG, the Alpine nation’s biggest bank, to reveal the names of 52,000 American customers after the company admitted helping wealthy clients evade taxes. That came after UBS agreed to pay $780 million in penalties and gave the IRS more than 250 clients’ names.
In court filings and a diplomatic note, the Swiss government has said the lawsuit would “seriously jeopardize” efforts to revise a 1996 tax treaty.
Under that treaty, Switzerland can turn over account data only on a reasonable suspicion of “tax fraud or the like,” according to a UBS court filing.
In the wake of April’s Group of 20 summit in London, Switzerland was placed on a “gray list” of countries that have yet to comply with Organization for Economic Cooperation and Development tax standards. The Swiss government says the country isn’t a tax haven. Other financial centers on the OECD list include Austria, Belgium, Luxembourg and Singapore.
(Source: Bloomberg)