A report says that US clients are pushing back into Swiss bank accounts, a decade after their use of the Alpine state’s lenders caused a messy legal problem.

The death of Swiss banking has been – apologies to Mark Twain – greatly exaggerated. Swiss bank secrecy is, at least as far as cross-border transfers are concerned, dead. But the country’s attractions haven’t faded for internationally-minded high net worth Americans, so a story suggests.

Over the weekend, the head of a subsidiary of UBS which handles money that US clients bring to Switzerland said that these customers are enthusiastically returning.

Worries about global geopolitics as well as uncertainties around US politics are helping to drive the change, Juergen Wegner, head of Swiss Financial Advisers, is quoted as telling Reuters.

His comments come after the Zurich-listed bank said it made a pre-tax profit of SFr932 million ($934.3 million) in the third quarter of 2018, rising by 3 per cent on a year earlier. Recurring net fee income and net interest income both rose from a year before on a new high for invested assets, with increased margins on deposits while transaction-based revenues fell on lower client activity. Adjusted operating costs rose, mainly because of spending on technology and regulatory-related expenses. The adjusted cost/income ratio was 75 per cent. This division logged SFr13.5 billion of net new money for the quarter. Total invested assets at the wealth arm stood at SFr2.392 billion at the end of September.

Perhaps one sign of how the American connection remains key for UBS is that it will, from the fourth quarter, begin to report its financial numbers in dollars.

Transatlantic bust-up
A decade ago, UBS settled civil and criminal charges with US authorities having been caught assisting wealthy Americans use offshore accounts. Since then, the US and Switzerland have drawn up a bilateral pact to crack down on such offshore accounts. Swiss financial firms have signed non-prosecution agreements with the US and paid fines. Globally, a raft of nations agreed to swap data to hunt tax cheats under what is called the Common Reporting Standard. Ironically, the US is not a signatory to the CRS. One feature of US tax law that makes it almost unique is that it levies tax on US citizens and Green Card holders wherever they live. Most nations tax citizens on a residency basis.

But while UBS and other Swiss firms have had costly brushes with the US law in the past, it seems that Swiss banks have too much to offer to be ignored. 

“The interest has increased, for political reasons and for reasons of diversification,” Juergen Wegner told the newswire. He did not elaborate.

US clients are increasingly interested in a broad diversification of their assets. “We notice this very strongly especially in terms of assets of more than $100 million,” Wegner is quoted as saying.

“If you suggested to a customer in 2012 to bring his money to Switzerland - even if it’s legal - then the customer was afraid to appear on a blacklist. There is a lot less of this, we can tell,” Wegner said.

A number of Swiss banks, such as Vontobel and Lombard Odier, are targeting international US clients. In Europe, firms as varied as Schroders, MASECO, London & Capital and Royal Bank of Canada, make a point of continuing to serve US expats, for example. 

Organisations such as American Citizens Abroad continue to push for the US to move towards the residency-based tax code used by most major developed countries.