Thursday, September 3, 2009

Oldest Swiss Bank Tells Clients to Sell U.S. Assets or Leave

The long arm of U.S. government harassment of international investors may result in blowback that could cause further damage to the U.S stock market.

Wegelin & Co., Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with U.S. tax obligations.

Bloomberg reports:

U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities that may be
inherited by the heirs of people who have such holdings prompted the advice from
the St. Gallen, Switzerland-based bank, said Managing Partner Konrad Hummler.

“We came to the conclusion that it’s a threat to our clients,” Hummler, who
is also president of the Swiss Private Bankers Association, said in an interview
yesterday during a conference in Zurich. “It’s also a threat to us as a bank
because as a custodian we are an executor to the estate. We find this aspect
discomforting, so we recommend selling all American securities whatsoever.
Swiss banks manage $2 trillion, or 27 percent, of the world’s privately held offshore wealth.

Though the bank is seeking to provide U.S, stock market via European derivatives, this can't do anything for the U.S. stock market other than put added downward pressure on it, and cause it to become a more isolated market in terms of global opportunities.

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