Known for its centuries old tradition of bank secrecy, Swiss banks are constantly lambasted for being the private bankers of dictators and plunderers. Cash, jewelry, paintings, gold bars and items of value that are believed to have been looted from poor economies, through the ages, are said to be kept in Swiss banks. As a young boy, I even read an article about dirty money and somebody was quoted to have said that Swiss banks are probably sitting on King Herod’s riches, until now.

Well, a crack has appeared on its once thick formidable walls. The Union Bank of Switzerland (UBS) has announced that it is now putting an end to providing private banking services to US clients. The move came after the company attracted increasing attention from US regulators. The company decided that letting go of US clients is the best business decision despite the fact it will eat into its profits. UBS’ Private banking services raked a profit (before taxes) of US $5.3 Billion in 2006 but at this point, there is no available data on how much of that came from wealthy US clients.

Most probably, the move to partially end its long tradition of banking secrecy was done in order not to compromise its onshore operations in other countries, specifically its huge exposure in the United States. In fact, one fourth of UBS’ entire staff is said to be in the US.

Whatever the real reasons may be, behind the move to end private banking for US citizens, it is but rational to believe that it will probably be duplicated in other countries within the coming days. In addition, other Swiss banks will probably implement similar moves in order to cope with the changing times.

Offshore Banks may be forced to Consolidate

Until now, offshore private banks in Europe are enjoying stability due to excess liquidity and low asset risk. However, Standard and Poor’s reports that the pressure to sustain profit growth rates may force some private banks to consolidate or acquire their competitors.

Burmese Leaders Eye Hongkong Banks

Singapore banks, which are believed to be the offshore banking destination of Burmese generals has started to distance themselves from the latter, at the urging of the United States. This is reportedly resulting to a quiet, if not frantic, search for new banking centers.