With their long-cherished secrecy practices increasingly under attack, Swiss banks are scrambling for a new way to attract wealthy foreign clients.
"Banking secrecy is no longer there. That's gone. It is over," international wealth management consultant Osmond Plummer told a gathering of Swiss bankers in Geneva last week. And once the secrecy ends, he stressed, Swiss financial institutions will have to come up with a new magnet if they want to remain attractive for large foreign placements.
Still reeling from the decision by US authorities to hand a $104 million reward to former UBS banker Bradley Birkenfeld for blowing the whistle on the Swiss bank and handing over details on thousands of clients in a 2008 tax evasion case, the bankers and wealth managers gathered at the seminar decried their former colleague's "total lack of morality".
The US forced UBS to pay a $780 million fine based on Birkenfeld's revelations, and has since launched investigations into 11 other Swiss banks suspected of encouraging their clients to channel undeclared assets into Swiss accounts. Several Swiss bankers have also been indicted for hiding more than $1 billion in assets.
The scandals appear to have driven a nail into the heart of once seemingly invincible Swiss bank secrecy practices, which have been entrenched in the small country of just under eight million people since a 1934 law made revealing a bank client's identity a criminal offence.
The banks' vow of silence, Plummer said, was so attractive to rich foreigners eager to avoid taxation at home that they didn't mind that their accounts did not generate any income.