Swiss lawmakers approved a UBS AG tax treaty with the United States, ending a two-year legal battle that threatened the American business of Switzerland's largest bank.
The approval, by majority votes in both chambers of Parliament, came after weeklong negotiations between the upper and the lower house, during which deputies dropped a demand for the treaty to be opened to a nationwide referendum.
"It's a breakthrough for UBS and for Switzerland as a financial center," Peter V. Kunz, head of the business law department at the University of Bern, said Thursday in a telephone interview.
The approval means UBS can complete the handover of client data of suspected tax dodgers by August, allowing the Zurich company to close a chapter that the Justice minister had called an "existential threat." Almost 37% of UBS' 65,233 employees worked in the Americas at the end of 2009. UBS' Wealth Management Americas unit managed 690 billion Swiss francs ($611 billion) at the end of the year.
Switzerland agreed in August 2009 to hand over data on as many as 4,450 UBS clients suspected of tax evasion to the Internal Revenue Service. Parliamentary approval became necessary after a court ruled in January that the agreement couldn't be enforced as it then stood. A referendum would have meant a deadline for disclosure of the information was missed.
The agreement was part of global efforts by countries such as the United States and Germany to crack down on tax evasion as budget deficits are ballooning in the wake of the economic crisis. Switzerland, Liechtenstein, Luxembourg and Austria agreed to facilitate the exchange of bank account data.
"Nothing now stands in the way of UBS client details being disclosed in cases where the decision handed down has taken legal effect," the Justice Ministry said on its website. Efforts to meet the August deadline are "on course," it said.
The lower house, in Bern, voted 81 to 63 to endorse the treaty without the referendum option, with 47 abstentions. The upper house approved the accord Thursday.
UBS, Switzerland's biggest bank by assets, said it is "confident" it can meet all its obligations under separate deals with the Department of Justice and the Securities and Exchange Commission by the relevant deadlines in August.
"I welcome the Parliament's approval of the state treaty," UBS Chief Executive Officer Oswald Gruebel said by e-mail. "I and the whole bank thank the government and those parliamentarians who lobbied for finding a solution in this matter."
UBS stock gained as much as 2.9% a share before closing at 15.72 francs ($14.14). That gave the bank a market value of 60.2 billion francs ($54.13 billion).
"This is good for the sentiment on UBS," said Georg Kanders, a WestLB analyst, who has a "neutral" rating on UBS. "The strong Swiss franc and relative security" will help the bank to stop outflows from its wealth management businesses.
Though supported by the government and the Liberal and Christian Democratic parties, the agreement became entangled in partisan politics as both the nationalist Swiss People's Party, or SVP, and the Social Democrats made their support conditional on their own agendas.
"This is a good result for the constructive forces in this Parliament," Swiss Justice Minister Eveline Widmer-Schlumpf told reporters after the debate. "I'm relieved."
