GENEVA (AP) — Switzerland's oldest private
bank, Wegelin & Co., said Friday it is selling most of its business to
Raiffeisen Group amid a dispute with U.S. authorities over tax-cheating
allegations.
A majority of Wegelin's clients and staff
will be transferred to a company called Notenstein Private Bank Ltd. That in
turn will become a 100 percent subsidiary of Raiffeisen for an undisclosed sum,
the two banks said in a statement.
Wegelin will remain in existence "to
finalize the closure of all remaining U.S. client relationships and to continue
the negotiations with the U.S. justice authorities," they added.
Earlier this month, the St. Gallen-based
Wegelin said it was bracing for a battle with U.S. authorities after three of
its staff were charged with conspiring to hide more than $1.2 billion in client
assets from U.S. tax officials.
U.S. authorities announced Jan. 3 they had
charged Urs Frei, Michael Berlinka and Roger Keller with helping Americans open
secret accounts to hide money.
Wegelin said at the time that it had spent
months meticulously examining its U.S. operations over the past decade and
together with American lawyers it is "prepared for the expected
quarrel." It said it never broke Swiss law during that period.
Wegelin's senior managing partner, Konrad
Hummler, said Friday its managing partners with unlimited liability "will
fulfill our responsibilities and stand by Wegelin & Co.'s
obligations."
"We are determined to see the legal
negotiations through to the end," he added.
Hummler acknowledged the sale was a
"painful step" but said "the extraordinarily difficult situation
and threat to the bank brought about by the legal dispute with the U.S."
had forced him to make the decision.
"I never could have imagined that we,
as owners of Switzerland's oldest bank, would ever have considered
selling," he said. Wegelin was founded in 1741.
Raiffeisen CEO Pierin Vincenz said the deal
was a "quantum leap" for his company that enables it to expand in
private banking.
Switzerland has been gradually softening
its banking secrecy rules in recent years amid pressure from cash-strapped
foreign governments angry that their taxpayers are hiding money in Swiss banks.
Copyright
2012 The Associated Press.