* Threat of U.S. indictment hangs over Swiss banks
* Cabinet to consider solution next Wed or a week later
* No recourse to emergency law possible
* Swiss ministry in touch with DoJ
By Emma Thomasson
ZURICH, June 21 The Swiss government will consider ways to allow the country's banks to hand over information to U.S. authorities either next Wednesday or a week later, a spokesman said on Friday, later than previously indicated.
The government is under pressure to find a way to save its banks from criminal charges for helping wealthy Americans evade tax after parliament blocked a bill on Wednesday that would have allowed the banks to sidestep strict secrecy laws.
Finance Minister Eveline Widmer-Schlumpf had said the government could consider issuing an executive order on Friday to allow banks to comply with U.S. demands, but the government spokesman said her ministry was still working on the plans.
The spokesman told a regular cabinet news conference that the finance ministry now planned to present a solution at the next cabinet meeting on Wednesday or, more likely, a week later.
The finance ministry, which has repeatedly warned of the threat of U.S. indictments of banks if parliament rejected the legislation, has been in touch with the U.S. Department of Justice to inform it of the situation, the spokesman said.
U.S. authorities want Swiss banks to pay fines potentially amounting to $10 billion for the whole industry and hand over the names of Americans it suspects of using secret accounts to evade tax, but strict secrecy laws stop them from complying.
The bill that parliament rejected this week would have allowed banks to sidestep those laws by revealing internal information that would help U.S. authorities identify clients while stopping short of handing over names.
The government used emergency powers to allow its biggest bank, UBS, to hand over 4,450 client names in 2009 as part of a U.S. settlement that included a $780 million fine after it admitted to helping U.S. clients to dodge taxes.
In the case of UBS, the Swiss used those special measures to override its secrecy laws because the bank was considered to be of crucial importance to the country's financial system.
The government has ruled out a repeat of that step, but looks set to grant permission for banks to transfer more information as they seek to placate U.S. prosecutors.
Such an executive order faces likely legal challenges from bank employees worried about their data being passed to U.S. authorities that could delay the transfer, likely testing the patience of the Department of Justice.
Swiss privacy laws have helped to make the Alpine country the world's biggest offshore financial centre, but they have also drawn the ire of countries seeking to fight tax evasion.
U.S. authorities have more than a dozen banks under formal investigation, including Credit Suisse, Julius Baer , the Swiss arm of Britain's HSBC, privately held Pictet in Geneva and local government-backed Zuercher Kantonalbank and Basler Kantonalbank.
Earlier this year a U.S. indictment felled Switzerland's oldest private bank, Wegelin & Co, which closed after paying a $58 million fine and pleading guilty to aiding tax evasion.