Deutsche Bank’s U.S. tax fraud
settlement has heightened expectations of more deals being struck as American
authorities target overseas banks in a crackdown on tax dodgers.
U.S. prosecutors are pushing ahead
with more probes, emboldened after top Swiss wealth manager UBS had to hand
over the details of 4,450 clients.
Leads from that case have helped
investigators look at banks in Asia and the Middle East, while clients from HSBC
have also been under scrutiny, lawyers have said.
There was relief that Deutsche
Bank’s $553.6 million settlement would not hit its earnings and is unlikely to
have a lasting impact, analysts and tax experts said.
Unlike Swiss rival UBS, which suffered a client
backlash after an earlier settlement, Deutsche Bank is seen as less likely to
face a longer-term hit to its reputation.
Deutsche is not bound by the same
bank secrecy laws as UBS, which means it can hand client data over to U.S.
authorities if necessary, a Zurich-based tax lawyer said.
Deutsche Bank said it had already
provisioned for the settlement. It set aside 250 million euros in March 2006 in
connection with talks with the U.S.
The Deutsche Bank settlement is
part of a wider U.S. drive to crack down on banks that help wealthy Americans
evade taxes and could herald similar settlements with other banks.
“This is probably just the start. There
are so many banks out there and they all did the same, so it’s easy for the
It’s just a question of how much
information they have,” the Zurich tax lawyer said.
UBS paid $780 million in fines for
helping clients with roughly $20 billion in assets hide their accounts from the
U.S. Internal Revenue Service.