ZURICH--Wegelin, Switzerland's oldest bank, broke itself up on Friday, buckling under the pressure of a long-running campaign by U.S. authorities against tax cheats hiding cash in secret Swiss accounts.
The 270-year-old bank to the super-rich moved most of its employees, along with clients and assets of 21 billion Swiss francs ($22.9 billion), to Notenstein Privatbank, an entity set up specifically for the purpose. Notenstein has in turn been bought by Swiss cooperative bank Raiffeisen for an undisclosed sum, the banks said, leaving Wegelin with problematic U.S. assets under scrutiny from U.S. prosecutors.
The St. Gallen-based bank took the dramatic step in the face of possible indictment on charges the bank enabled wealthy Americans to evade taxes. By splitting its businesses, Wegelin is hoping to shield the healthy European operations from the consequences of the U.S. investigation.
It will remain in charge of its U.S. customers, and six of its eight partners will remain, leaving them to face the consequences of any U.S. actions. "Even if the bank itself isn't charged, the American situation could leave a prevailing feeling of legal insecurity over its businesses," said Michel Derobert, Secretary General of the Association of Swiss Private Bankers.
"One can certainly imagine how difficult this step was for us. We are giving up our life's work," said Konrad Hummler, one of Wegelin's eight top managing partners and a leader in Swiss financial circles.
"The monstrously difficult and existence-threatening situation that the dispute with U.S. authorities has put us in forces me and my partner of several years Otto Bruderer to this extraordinarily painful course of action," he said.
Hummler, one of Switzerland's most influential and outspoken bankers and Chairman of leading conservative daily NZZ, said he was relieved Raiffeisen was taking over Wegelin's employees and clients, 70 percent Swiss and 30 percent European. The problem U.S. assets will remain in Wegelin. Reuters calculations put the total of these assets at some 1.5 billion Swiss francs.
