In a world of greater transparency, Switzerland’s private bankers are beginning to accept that their traditional business model of managing the undeclared wealth of foreigners cannot be sustained.

There has been increasing international pressure to change following the damaging US legal battle with the largest Swiss bank, UBS.  Swiss private bankers now recognise the need to become more tax compliant and if necessary encourage clients to declare previously hidden assets. However, they stress that they cannot force clients to disclose.

Konrad Hummler, chairman of St Gallen-based Wegelin told colleagues at their annual meeting that times had changed. “A realignment of its business model would strengthen, not weaken, the Swiss financial centre.” The change in attitude is clear but what is less clear is how far this shift to transparency is likely to advance.

Last week, Switzerland and the US initialled a revised double taxation treaty. Since accepting greater transparency, Switzerland has signed revised double taxation treaties with six countries. Nevertheless, no deal has yet been reached between UBS and the US regarding disclosing information about US citizens with accounts in Switzerland.

The US Internal Revenue Service has until the end of this month to respond to a submission by UBS, backed indirectly by Bern, that the case be dismissed. If no out of court settlement is reached, the trial will begin on July 13.