US tax-fraud settlement adds $1.2 billion more to UBS losses for 2008
12 March 2009
Switzerland's largest bank, UBS yesterday said that it lost $1.2 billion more than declared earlier because of its settlement with US authorities under charges for facilitating tax evasion by its American customers through the use of offshore tax havens as well as a write-down on securities being transferred to the Swiss National Bank.
In February the Geneva-based bank had made Swiss corporate history by losing record 19.7 billion Swiss francs after running up a further net loss of 8.1 billion Swiss francs in the final quarter of last year, including 3.7 billion Swiss francs in exposures to toxic assets. (See: $27-billion Q4 loss compels UBS to slash 2,200 investment-banking positions)
Yesterday, it declared a 20.9 billion Swiss franc ($18 billion) loss for 2008, $1.2 billion more than earlier reported, and warned that it was still exposed to illiquid and volatile markets and will remain ''extremely cautious'' for this year.
A major part of the additional $1.2 billion loss was due to the $780 million settlement it made with the US authorities over charges of UBS employees helping wealthy Americans to conceal their ownership of assets held offshore by creating bogus entities and then filing IRS forms falsely claiming the entities owned the accounts.
But it is still facing a lawsuit in the Miami federal court to disclose the names of as many as 52,000 Americans who evaded paying tax in the US by not disclosing their accounts that held cash and securities in secret accounts in UBS. (See: US justice dept hauls UBS to court to force disclosures)
The rest of the additional losses came from write-downs on securities not yet transferred to the Swiss National Bank Fund, which was created by the Swiss government to remove toxic assets from the banks balance sheet.