Swiss bank settles with U.S. after 7-year legal battle

About a decade after Swiss bank secrecy laws started to crumble under the impact of a U.S. investigation, one of the last large lenders still entangled in the matter agreed to settle the dispute.

Zuercher Kantonalbank, Switzerland’s largest publicly-owned regional bank, will pay $98.5 million as part of a deferred prosecution agreement with the Department of Justice to end the investigation into the bank’s former business with U.S. clients.

More than a dozen Swiss banks have been targeted by the U.S. in a wide-ranging clampdown on offshore tax evasion. Among the biggest were Credit Suisse Group, which agreed to pay $2.6 billion in 2014 to settle the matter, and UBS Group, which paid about $780 million five years earlier. Both admitted they helped Americans cheat the IRS. Julius Baer Group, Switzerland’s third-largest wealth manager, settled for $547 million.

“We are relieved that after seven years, we were able to conclude the investigation following an objective dialogue with the U.S. authorities,” Joerg Mueller-Ganz, the Zurich-based bank’s chairman, said in a statement.

The tax evasion dispute between the U.S. and Swiss banks was kicked off by Bradley Birkenfeld, a former UBS banker arrested in the U.S. who then assisted investigators probing about $20 billion in taxpayer assets hidden overseas. That sparked investigations into other Swiss banks and, along with pressure from European governments, led to the end of Switzerland’s famous secrecy laws for offshore accounts.

Swiss banks have since adapted, with many smaller firms being taken over. Zuercher Kantonalbank has been adjusting its crossborder private banking business for the last nine years and now only takes tax-compliant customers, with an emphasis on Europe, it said.