UBS halts U.S. offshore services amidst tax probe

By Kevin Drawbaugh and Rachelle Younglai

WASHINGTON (Reuters) - UBS AG (UBSN.VX) will stop providing offshore private banking services to U.S. residents through unregulated entities, the Swiss bank said on Thursday at a congressional hearing on overseas tax-dodging.

A senior UBS executive apologized to a Senate investigative subcommittee that released a new report at the hearing claiming that thousands of wealthy Americans are avoiding taxes by hiding their assets in Switzerland and Liechtenstein.

Mark Branson, chief financial officer for UBS Global Wealth Management and Business Banking, said the bank's 80,000 employees were alarmed by reports of misconduct.

"They want to know that such misconduct does not belong in UBS and that the firm's ethics match their own," Branson said.

"I am here today to tell you and to tell them that no, that kind of misconduct does not belong in UBS."

Branson said UBS was working with the U.S. government to identify U.S. clients who may have engaged in tax fraud.

The Senate Permanent Subcommittee on Investigations' report claimed that UBS and another institution, LGT Bank, located in Liechtenstein, helped many U.S. citizens dodge taxes.

Lawmakers claim that through elaborate schemes at many banks in dozens of tax haven nations, U.S. citizens annually avoid $100 billion in tax payments. The report accused tax haven nations of engaging in "economic warfare against the United States and honest hard-working American taxpayers.