* 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
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.