ZURICH

The Pak Banker - - COMPANIES/BOSS -

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.

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