Switzerland-based Credit Suisse Group AG (NYSE:CS) has denied claims by Germany that Swiss banks have been helping German tycoons in transferring their money to rivals financial institution centers, such as Singapore. According to Reuters, the head of Credit Suisse Group AG (NYSE:CS) denied the claims by the German Media that the banks in Switzerland have been helping the wealthy Germans in moving their funds to financial hubs of Asia, in a bid to avoid detection and taxation of their assets.
According to the report, this has caused a predicament to the proposed deal between Germany and the Swiss Government, that is expected to allow Germans hold anonymous accounts in Switzerland, subject to withholding taxes, after which, the Swiss government will retroactively impose the withholding tax in the future interest income, on the amounts deposited on the accounts.
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Credit Suisse Chairman, Urs Rohner, is quoted in a conference saying, “a strategy of aiding tax dodgers is economically stupid and morally unacceptable.” He further added, “some of the noise … is clearly unfounded as far as I can check. For example, the accusation that a lot of clients funnelled funds to other offshore centres like Singapore. Recent statistics on money flows will show you it’s actually the other way around with regards to German money.”
As at the moment, the Swiss government is noted to have already agreed on deals with Austria, Britain, and Germany, and is also on course in pursuing similar deals with Italy and Greece. Additionally, it is noted that several other countries are eager to agree on similar pacts with the Central European nation, but the derailing condition with Germany may make the eager countries take a second thought.
While Credit Suisse Group AG (NYSE:CS) may object to the allegations, it noted that German Authorities invaded homes of Credit Suisse clients, while last year, the bank was fined 150 million euros (approximately $189 million), to mark the end of an investigation regarding the bank’s employees in helping German clients dodge taxes.
Nonetheless, the Credit Suisse Chairman urged the Swiss government to continue with its exercise in negotiating terms with European governments towards this course. He said, “a withholding tax and a tax of legacy assets is the proper and sensible means to ensure tax compliance, while safeguarding privacy.”
In one of our articles in June, we featured certain requirements by the Swiss government that the Swiss banks are expected to meet, whereby, the banks are expected to meet certain levels of tier one capital. While Basel III requires them to have at least 6%, the Swiss government requires even a higher rate from its local banks. Its local competitor UBS (NYSE:UBS) had 7.5%.
The activity of allowing the tax pact deals could allow clients from other countries put money in Swiss accounts, which is the positive side of the outcomes, because it would help improve capital base. On the other hand, it could also drive away some clients who try to evade taxes under all circumstances, thereby prompting a decline in capital funds.
As at the time of this writing, Credit Suisse Group AG (NYSE:CS) was trading at 15.28 Euros per share, down o.09 cents or a 0.59% decline.