Swiss Finance Minister Eveline Widmer-Schlumpf announced a deal last week that she said would put an end to the row that has been poisoning relations between Switzerland and the United States for years.
However, she acknowledged, the settlement was not a negotiated agreement but a “unilateral offer” from Washington, and due to a confidentiality clause, no details of the deal could be divulged until parliament had given it its blessing.
She urged parliament, which has no power to amend the agreement, to urgently debate the issue, stressing the importance of the deal taking effect by July 1.
Swiss parliamentarians however balked at the idea of discussing the issue without knowing what conditions were attached, and on Wednesday, the National Council, or the lower house of parliament, voted to freeze its handling of the deal until it had more information.
“We understand that the National Council is demanding more information about the offer from the US authorities,” the Swiss Bankers Association told AFP in an email.
But, stressed the group which represents nearly 350 banks and financial institutions, “it is important for the banks to have a legal basis before they act.”
Washington has repeatedly accused Swiss banks of complicity in tax evasion, since they hold billions of dollars belonging to American citizens that are not declared to US tax authorities.
The controversial deal would enable Swiss banks to circumvent some elements of the country’s cherished bank secrecy laws and turn over key information to US authorities.
How much the banks will have to pay to win legal closure is not yet known, but Swiss media have reported that the overall figure could hit 10 billion Swiss francs ($10.5 billion, 8.0 billion euros).
Despite the expected sting, the head of the Swiss Bankers Association’s executive committee, Claude-Alain Margelisch, cautioned at a seminar this week that Swiss banks likely had no choice but to bow to the US demands.
US tax authorities now have access to some 30,000 new declarations from US citizens on their holdings in Switzerland, and he warned some might be tempted to push the blame for lacking past filings onto their Swiss bank, he warned.
“We need to find a solution for the (bankers) who acted correctly,” he said, stressing the need to clearly distinguish between establishments that had acted inappropriately and those that had not.
The head of Geneva private bank Pictet, one of 14 Swiss banks under Washington’s magnifying glass, also insisted Friday that “a quick solution is necessary”.
The bank did not want “to put off resolving this problem indefinitely,” Nicolas Pictet told the bankers association’s annual general assembly.
Without the deal, banks with nothing to hide would not have a legal basis allowing them to prove their innocence to US authorities, Margelisch said.
He warned that without the deal “the Americans will be able to continue to threaten our banks in a completely arbitrary manner.”
Other participants at the seminar also pleaded for Switzerland to plunge in and accept the deal despite the blindfold, stressing that the banks had to swallow their bitter medicine if they wanted to avoid risking even more pain.
With no official details leaking out, the deal is the subject of frenzied speculation in the Swiss press.
According to Neue Zurcher Zeitung, unpleasant surprises could be in store, especially for the cantonal banks — there is one in each of Switzerland’s 24 cantons — which enjoy a government guarantee scheme.
“Ten to 15 of them apparently handled US undeclared funds in considerable proportions,” the daily wrote in on Sunday.
With a deal, Swiss financial institutions could find themselves in the bull’s eye of US criminal prosecution, experts warn.
As a sign of the growing concern about the deal, Swiss daily Tages-Anzeiger published an article speculating on what repercussions there might be for banks facing criminal charges in the United States.
Experts quoted by the paper said such institutions would be cut off from clearing in dollars, the cornerstone of the global financial market.
“When a Swiss bank is charged in the United States, it is dead,” Margelisch said during a televised debate late last week.
Case in point, last January, Switzerland’s oldest wealth management institution, Wegelin & Co, was forced to close up shop after it was found guilty of helping US citizens dodge their taxes at home.