GENEVA (AP) — Switzerland's oldest private bank, Wegelin & Co., said Friday it is selling most of its business to Raiffeisen Group amid a dispute with U.S. authorities over tax-cheating allegations.
A majority of Wegelin's clients and staff will be transferred to a company called Notenstein Private Bank Ltd. That in turn will become a 100 percent subsidiary of Raiffeisen for an undisclosed sum, the two banks said in a statement.
Wegelin will remain in existence "to finalize the closure of all remaining U.S. client relationships and to continue the negotiations with the U.S. justice authorities," they added.
Earlier this month, the St. Gallen-based Wegelin said it was bracing for a battle with U.S. authorities after three of its staff were charged with conspiring to hide more than $1.2 billion in client assets from U.S. tax officials.
U.S. authorities announced Jan. 3 they had charged Urs Frei, Michael Berlinka and Roger Keller with helping Americans open secret accounts to hide money.
Wegelin said at the time that it had spent months meticulously examining its U.S. operations over the past decade and together with American lawyers it is "prepared for the expected quarrel." It said it never broke Swiss law during that period.
Wegelin's senior managing partner, Konrad Hummler, said Friday its managing partners with unlimited liability "will fulfill our responsibilities and stand by Wegelin & Co.'s obligations."
"We are determined to see the legal negotiations through to the end," he added.
Hummler acknowledged the sale was a "painful step" but said "the extraordinarily difficult situation and threat to the bank brought about by the legal dispute with the U.S." had forced him to make the decision.
"I never could have imagined that we, as owners of Switzerland's oldest bank, would ever have considered selling," he said. Wegelin was founded in 1741.
Raiffeisen CEO Pierin Vincenz said the deal was a "quantum leap" for his company that enables it to expand in private banking.
Switzerland has been gradually softening its banking secrecy rules in recent years amid pressure from cash-strapped foreign governments angry that their taxpayers are hiding money in Swiss banks.