(Updates with bank’s attorney in fifth paragraph.)
Jan. 27 (Bloomberg) -- Wegelin & Co., the 270-year-old Swiss private bank, agreed to a sale to Switzerland’s Raiffeisen Group after coming under investigation in the U.S. for allegedly helping Americans evade taxes.
The U.S. business, and the risks and responsibilities that go with it, will remain with the current partners, St. Gallen, Switzerland-based Wegelin said in an e-mailed statement today. Wegelin, which describes itself as the oldest Swiss bank, didn’t disclose the sale price.
“The immensely difficult and existence-threatening situation into which the legal conflict with the U.S. authorities brought us forces me and my long-term partner Otto Bruderer, together with all unlimited-liability partners, to take this extremely painful action,” Konrad Hummler, the managing partner of Wegelin, said in the statement.
Wegelin said earlier this month that three bankers were charged with conspiring to help U.S. clients hide more than $1.2 billion from American tax authorities. The indictment came amid U.S.-Swiss talks to resolve a U.S. probe of offshore tax evasion. Officials are seeking to reach a settlement with Swiss banks and resolve criminal probes of 11 of them, including Wegelin.
The U.S. attorney for Wegelin, Richard Strassberg of Goodwin Procter LLP in New York, declined to comment.
“It’s regrettable that the oldest private bank of Switzerland has to be confronted with the only solution to sell itself to preserve the interests of its clients,” Patrick Odier, chairman of the Swiss Bankers Association, said in an interview in Davos today.
Switzerland and the U.S. aim to conclude talks on the tax matters by the end of the year, Swiss Finance Minister Eveline Widmer-Schlumpf told reporters yesterday in Davos, after a meeting with her U.S. counterpart, Timothy Geithner.
“The transaction shows how important it is to reach an agreement on the untaxed assets soon,” Mario Tuor, spokesman for Switzerland’s State Secretariat for International Financial Matters, said by phone. “From the Swiss perspective, the sooner we have an agreement, the better. Both the U.S. and Switzerland want a quick solution, but not at any price.”
The majority of Wegelin’s clients and employees will be transferred today into Notenstein Privatbank AG, which will be taken over by Raiffeisen, according to the statement. The asset management business of Wegelin will be transferred into 1741 Asset Management AG, it said.
Wooing U.S. Clients
The Swiss Raiffeisen Group consists of 328 cooperatively structured Raiffeisen banks with a total of 1,106 branches in the country, according to information on its website.
Raiffeisen’s purchase will add about 21 billion Swiss francs ($22.9 billion) of assets under management from Wegelin, of them at Swiss Bank A,’’ the indictment said. “Swiss Bank A Chief Executive Officer Pierin Vincenz told journalists in Zurich today. About 70 percent of the clients are Swiss and the rest from Europe, he said.
This month’s indictment, which didn’t identify Wegelin, referring to ‘‘Swiss Bank A,” said the three bankers wooed U.S. clients fleeing UBS AG, the largest Swiss bank. UBS avoided U.S. prosecution in 2009 by admitting it aided tax evasion, paying $780 million and handing over data on 250 accounts. It later disclosed information on about 4,450 more accounts.
“In or about 2008, the managing partners affirmatively decided to take advantage of the flight of U.S. taxpayers with undeclared accounts by opening new undeclared accounts for many opened new undeclared accounts for at least 70 U.S. taxpayers.”
--With assistance from Simone Meier in Davos, Klaus Wille in Zurich and David Voreacos in Newark, New Jersey. Editors: Frank Connelly, Keith Campbell
To contact the reporters on this story: Elena Logutenkova in Zurich at firstname.lastname@example.org; Leigh Baldwin in Zurich at email@example.com
To contact the editor responsible for this story: Frank Connelly at firstname.lastname@example.org