UBS tax case postponed to seek bargain

UBS AND the US authorities have agreed to postpone a hearing into a government lawsuit in the hope of reaching a settlement over demands that the Swiss bank hand over details of 52,000 American citizens suspected of tax evasion.

Both sides agreed to put off the hearing while they thrash out an agreement, although the US Justice Department said it would only accept a deal that would involve UBS handing over “information on a significant number of individuals” to the Internal Revenue Service (IRS).

UBS, backed by the Swiss government, says it cannot hand over details of clients because it would violate Swiss law.

But Judge Alan Gold asked the US authorities last week to say how far they would go to punish UBS if it loses the case, including the possibility of freezing its US assets.

Sources close to the situation have speculated that a compromise might see UBS spin off its US wealth management business, possibly under the Paine Webber brand it ditched after acquiring the brokerage.

Meanwhile, the bank is considering appointing someone from outside the group to run the US wealth management business.

The front-runner to take over from current head of US wealth management Marten Hoekstra is understood to be Robert McCann, who previously headed up Merrill Lynch’s financial advisory business.

Morgan Stanley’s James Gorman and former Citigroup executive Sallie Krawcheck have also held talks with UBS over the role, although the bank may choose to appoint someone to work underneath Hoekstra instead.