Ben Jones, an international tax expert at Eversheds, has commented on the announcement from private Swiss bank Frey & Co that it will close due to costs arising from the country’s dispute with the US over alleged tax evasion.
Jones said: ‘As one of the banks excluded from the agreement struck between the US and Swiss governments at the end of August, Frey & Co would have been facing the continued threat of prosecution and potentially significant fines. It was this very same scenario that brought about the downfall of one of Switzerland’s oldest banks, Wegelin & Co, last year.
‘Had Frey been able to weather the fines it may have had to pay to the US, the broader impact of the US-Swiss agreement is likely to be a more limited private banking market with greater administrative costs and burdens.’
He added: ‘Frey has recognised this now but it seems likely that this will only be the first of a number of further closures or consolidations arising from the continued US crackdown on the Swiss banking system.’