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German lender settles US tax case
By Harro Ten Wolde and Maria Sheahan |
December 23, 2010, Thursday
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Print Edition
Print Edition
DEUTSCHE Bank's settlement of a United States tax fraud case has raised expectations of similar deals being struck by other banks, although there was relief that the US$553.6 million cost to the German bank would not hit its earnings.
Germany's flagship lender admitted criminal wrongdoing for taking part in fraudulent tax shelters that allowed clients to hide billions of dollars, and agreed to pay up to settle the case, US prosecutors said.
But unlike Swiss rival UBS, which suffered a client exodus after an earlier settlement, Deutsche Bank was seen as less likely to face long-term damage to its reputation.
Bank secrecy does not present the same hurdle to Deutsche Bank handing over client data and the financial settlement should draw a line under the matter, a Zurich-based tax lawyer said.
Deutsche Bank said the deal would not hit profits and its shares were only marginally weaker as markets digested the news.
The Deutsche Bank settlement is part of a larger US effort to crack down on banks that help wealthy Americans evade taxes.
Prosecutors last year settled with UBS, which paid US$780 million in fines.
Leads from the UBS case are pointing investigators to potential criminal behavior by other banks in Asia and the Middle East. Prosecutors are already investigating clients at Europe's largest bank, HSBC Holdings.
The Deutsche Bank fine represents fees the bank earned setting up tax shelters, taxes and interest the Internal Revenue Service could not collect and a civil penalty of some US$149.8 million.
Germany's flagship lender admitted criminal wrongdoing for taking part in fraudulent tax shelters that allowed clients to hide billions of dollars, and agreed to pay up to settle the case, US prosecutors said.
But unlike Swiss rival UBS, which suffered a client exodus after an earlier settlement, Deutsche Bank was seen as less likely to face long-term damage to its reputation.
Bank secrecy does not present the same hurdle to Deutsche Bank handing over client data and the financial settlement should draw a line under the matter, a Zurich-based tax lawyer said.
Deutsche Bank said the deal would not hit profits and its shares were only marginally weaker as markets digested the news.
The Deutsche Bank settlement is part of a larger US effort to crack down on banks that help wealthy Americans evade taxes.
Prosecutors last year settled with UBS, which paid US$780 million in fines.
Leads from the UBS case are pointing investigators to potential criminal behavior by other banks in Asia and the Middle East. Prosecutors are already investigating clients at Europe's largest bank, HSBC Holdings.
The Deutsche Bank fine represents fees the bank earned setting up tax shelters, taxes and interest the Internal Revenue Service could not collect and a civil penalty of some US$149.8 million.
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