Wegelin & Co., Switzerland's oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns that new rules will saddle investors with tax obligations in the world's biggest economy.
U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities that may be inherited by the heirs of people who have such holdings prompted the advice from the St. Gallen, Switzerland, bank, Managing Partner Konrad Hummler said.
"We came to the conclusion that it's a threat to our clients," Hummler, who is also the president of the Swiss Private Bankers Association, said in an interview Tuesday during a conference in Zurich.
"It's also a threat to us as a bank because as a custodian we are an executor to the estate. We find this aspect discomforting, so we recommend selling all American securities whatsoever," he said.
Swiss banks, which manage $2 trillion, or 27%, of the world's privately held offshore wealth, are struggling to protect bank secrecy after the government agreed to hand over the names of 4,450 UBS AG clients to U.S. tax authorities.
Hummler said he wouldn't ask other association members to follow Wegelin's lead.
