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US client list puts UBS in 'untenable position'

UBS cannot comply with a United States request to disclose the identity of 52,000 US secret account holders, the bank's Chief Executive Oswald Gruebel said in an internal memorandum, according to a source familiar with the situation.

The UBS chief executive officer sent the confidential memorandum to the bank's top executives on Thursday, the source said, confirming comments reported earlier in the day by the New York Times.

Gruebel, hired in February to turn around the troubled Swiss wealth manager, said turning over the names "would require UBS to violate Swiss criminal law, and we simply cannot comply," the paper quoted Gruebel as saying in the memo.

A court hearing seeking to assess whether UBS is to disclose the names to US tax authorities is due to start on Monday.

The judge presiding the hearing has ordered the US government to say tomorrow whether it was prepared to shut UBS in the United States as part of a battle to learn the identity of the accounts suspected of being used by Americans to avoid taxes.

Switzerland, the world's biggest offshore banking center, vowed in filings to the US court to prevent UBS from handing over client data to the Internal Revenue Service in an effort to defend bank secrecy laws, saying the tax case is souring diplomatic ties.

UBS said in an e-mailed statement: "The IRS summons puts UBS in an untenable position, caught between the laws of two sovereign nations."

"Honoring the IRS summons would require UBS to violate Swiss criminal law," the statement said.


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