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UPDATE 1-Swiss say on course to fulfil UBS-US tax treaty

Published 08/26/2010, 10:49 AM
Updated 08/26/2010, 10:52 AM

* Swiss govt says has examined 4,450 UBS accounts to US

* Says in talks with US over final data handover

* Says optimistic, handover should end US tax probe into UBS

(Adds details)

ZURICH, Aug 26 (Reuters) - The Swiss government said it was optimistic U.S. authorities would definitively withdraw legal action over tax fraud that threatened to bring Switzerland's biggest bank, UBS, to its knees.

The U.S. government agreed last August to drop tax evasion charges against UBS after Switzerland promised it would transfer the details of around 4,450 clients UBS helped to dodge taxes, lifting the veil on Switzerland's cherished tradition of banking secrecy.

Swiss tax authorities had examined the clients' accounts by Thursday's deadline, and talks were being held with the U.S. over the final handover of information, the Swiss Finance Ministry said on Thursday.

"Both parties are optimistic that the U.S. authorities will receive most of the agreed account information within a reasonable period of time and that the U.S. authorities will definitively withdraw the civil action (John Doe Summons) brought against UBS," the ministry said.

"The data delivery will be largely concluded by autumn 2010," it said, adding around half the data had already been handed over.

The deal hung in the balance until Swiss parliament gave its support in June and ruled out a referendum on the issue, removing the last obstacle to straight-talking UBS boss Oswald Gruebel's quest to revive the fortunes of the bank, which hauled him from retirement after the state had to bail it out.

UBS's wealthy clients had been leaving in droves as the threat of renewed legal action loomed if Switzerland failed to deliver on its promises within a year of the deal being struck.

Gruebel has assured investors that client cash should stop gushing from UBS by the end of 2010, solving the bank's final problem after it turned in a net profit of 2 billion Swiss francs ($1.9 billion) in the second quarter, its third quarterly profit in a row under Gruebel after a string of heavy losses in the financial crisis.

Switzerland's banks should not run into further trouble with the U.S. taxman now the damaging dispute with UBS had been cleared up, Switzerland's top tax diplomat, Michael Ambuehl, said earlier this month. (Reporting by Jason Rhodes; Editing by Will Waterman)

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