Bank Frey announced late last week that it was to voluntarily close its doors.
News of the closure of the second Swiss bank focussed media attention on another 12 that are under investigation by the US, and on the future of Switzerland’s private banking sector, which is having to compete increasingly with private banks in other parts of the world, including Asia.
As reported, Switzerland’s oldest private bank, Wegelin, announced in January it was to close, after it pleaded guilty to charges that it had helped US citizens to avoid paying tax, and paid a $74m fine to the US authorities. It had been founded in 1741.
The case marked the first time that a foreign bank had been indicted by the US for facilitating tax evasion by Americans, and the first time a guilty plea was entered by a foreign bank in response to tax charges.
‘Financially healthy’
In a statement on its website, Bank Frey noted that it was “financially healthy and will not be liquidated”.
It added that the decision to cease banking activities had been taken “voluntarily, and as a result of an analysis of the overall circumstances”, and that “it should be stressed that… Bank Frey is a ‘subject’ and not a ‘target’” of the US efforts to go after Switzerland’s banks.
“The bank has not been indicted and neither is it under the threat of indictment,” it added.
“The bank has also acted cooperatively within the framework of both Swiss and United States law, and intends to continue to do so.”
Although Bank Frey wasn’t designated a bank until 2000, its roots in wealth management date back to 1941, when a certain Dr Hugo Frey “began to enrich his professional legal advice by managing assets on behalf of his clients”, according to a history on the Bank Frey website.
According to the Swissinfo.ch website, an arm of the Swiss Broadcasting Corp, the US investigation into Bank Frey’s activities revealed that the bank had increased the number of its American clients by 300% between March 2009 and February 2012, and as of September 2012, 44% of the institution’s managed assets came from American clients.
Because it was on a list of banks that were under investigation, Bank Frey was not able to take advantage of a programme, announced in August, that allowed Swiss banks that were not under criminal investigation to avoid prosecution by providing information to the US authorities, and paying a fine.
