Julius Baer reaches preliminary deal in U.S. tax case

Wed Dec 30, 2015 6:10am EST
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By Brenna Hughes Neghaiwi and Joshua Franklin

ZURICH (Reuters) - Julius Baer has reached an agreement in principle with U.S. authorities to settle an investigation into allegations it helped wealthy American clients evade taxes, potentially drawing a line under the Swiss bank's biggest legal issue.

Switzerland's third largest listed bank said it had set aside nearly $200 million in additional provisions for the settlement, bringing the total amount earmarked for potential penalties to $547.25 million, which the bank will charge to its 2015 full-year results.

Julius Baer's penalties potentially look much lighter than those paid by larger rival Credit Suisse, which in 2014 was fined $2.5 billion for helping Americans evade taxes and pleaded guilty to a U.S. criminal charge.

U.S. authorities have conducted criminal investigations of several Swiss banks after UBS agreed in 2009 to pay $780 million and identify certain U.S. clients to resolve criminal charges that it helped Americans evade taxes.

Julius Baer's deal with the U.S. Attorney's Office for the Southern District of New York, which conducted the investigation, remains subject to approval by the U.S. Department of Justice (DOJ), Baer said in a statement.

Zurich-based Baer said it hoped to settle the Justice Department investigation, which began in 2011, in the first three months of next year‎.

The bank said it still expected to report a net profit for the current financial year and would remain adequately capitalized.

Baer's shares rose as much as 4.4 percent, versus a 0.4 percent fall in the European banking index, on relief that the provisions were lower than expected. A Swiss media report earlier this month suggested a settlement might cost Baer double the $350 million it set aside in June.   Continued...

The logo of Swiss private bank Julius Baer is pictured on the company's branch in Lausanne November 13, 2014. REUTERS/Denis Balibouse