Austria feels heat of EU's anti-bank-secrecy drive

Mon Apr 8, 2013 12:47pm EDT
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By John O'Donnell

BRUSSELS (Reuters) - The European Commission warned Austria on Monday that its banking secrecy regime would leave it in a "lonely and unsustainable position" if it did not follow the same rules as other countries in sharing information on foreign depositors.

Austrian Chancellor Werner Faymann said he was open for talks on the subject. But Finance Minister Maria Fekter said she would fight "like a lion" to safeguard the country's centuries-old tradition of keeping bank accounts private.

As part of a drive to curb tax evasion, Germany has been pressing all "offshore" banking centers in Europe to apply uniform rules on exchanging account holders' information. Particular attention has been paid to Luxembourg and Austria, the only EU states holding out.

Last month's bailout of Cyprus, where the banking system was swollen by foreigners drawn by low taxes and easy regulation, has served to focus attention on such jurisdictions across the EU. Last week the issue also claimed the job of French budget minister Jerome Cahuzac, who was placed under formal investigation for fraud after admitting lying about having a Swiss bank account.

In a sign that the German-led pressure is having an impact, Luxembourg's finance minister, Luc Frieden, said at the weekend he was prepared to look at easing his country's secrecy rules, although he did not say how or when.

Luxembourg's banking system holds deposits equivalent to about 10 times the tiny country's economy.

The European Commission said Frieden's comments, made to a German newspaper, were a step in the right direction and that the ball was now in Austria's court.

"I very much welcome Luxembourg's new openness to automatic exchange of information, even if it is long overdue," Algirdas Semeta, the European commissioner responsible for tax and customs policy, said in a statement sent to Reuters.   Continued...

European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud Algirdas Semeta addresses a news conference in Brussels after the EU's executive proposed new rules to protect the financial interests of the European Union July 11, 2012. REUTERS/Francois Lenoir