Swiss banks hoping to atone for decades of complicity in tax evasion may be left to sweat it out for months as the United States and Germany ponder the right level of punishment.
Switzerland has long dodged US accusations of hiding money for wealthy Americans. But now eleven Swiss banks are under investigation in the United States and there is pressure too from Europe where burdened taxpayers want scalps after numerous banking scandals. The Swiss need a deal to remove the taint from their financial industry. However, Washington must factor forthcoming elections into its thinking, and Germany is delaying ratification of a tax deal key to Switzerland's efforts to strike similar agreements elsewhere in Europe. So the Swiss may be in limbo for a while.
The wait is painful for a country which counts on banking for 7 percent of its economic output: until Swiss banks know how much information they need to share with foreign tax authorities they will struggle to attract new clients.
As a result the share prices of its top banks -Credit Suisse and Julius Baer (BAER.VX) are among those being investigated -- are falling as investors fret about earnings.
"We are prepared to sign a settlement with the U.S. for the Swiss banks today. We feel we have made a constructive proposal to the U.S. but it is up to them to accept it or not," said Switzerland's Finance Minister Eveline Widmer-Schlumpf.
"This depends on whether the U.S. is willing to reach a settlement before or after their elections, which is unclear at the moment," she said.Both Widmer-Schlumpf and chief negotiator Michael Ambuehl have dampened expectations for a U.S. deal by November, stoked as recently as last month by the finance minister herself. "There is an open window after the summer lull, but it's relatively tight.