Swiss banks' unease over Wegelin
The Swiss bank Wegelin is to close, after admitting that it helped about 100 US clients evade paying taxes.
The news that Switzerland's oldest private bank will cease to operate has potentially huge implications for Switzerland's entire banking sector, and for the long tradition of Swiss banking secrecy.
Thirteen other Swiss banks are under investigation by US authorities, among them Credit Suisse, a bank now termed "too big to fail" by the Swiss government.
When Wegelin's managers pleaded guilty in a New York court, the case was watched with mounting horror by the financial communities in Zurich and Geneva.
Many had expected Wegelin to continue to try to fight the case. For months, the bank had failed to turn up in court, saying the summons had not been delivered correctly.
Instead, Wegelin's guilty plea included the admission that it intentionally opened accounts for US citizens to help them avoid tax.
In court, Wegelin's managers said they knew it was wrong, but thought they would not be prosecuted because it was legal in Switzerland and common practice in Swiss banking.
Those last words in particular are causing huge concern. Some Swiss financial analysts are already speculating that Wegelin's $58m fine, which many had expected to be higher, was kept low by the US authorities in return for Wegelin clearly implicating the rest of the Swiss banking community in tax evasion.Fruitless negotiations
For at least two years, the Swiss government has been actively pursuing a deal with the US, similar to those it has already agreed with the UK and with Germany, in which Swiss banks charge foreign clients a withholding tax.
But so far, negotiations with the US have proved fruitless. Washington clearly prefers the legal route. Meanwhile, the German parliament has also questioned the deal.
Many believe the Swiss government is trying to square an impossible circle: satisfy foreign governments, who are determined to reclaim their tax revenue, and still protect Switzerland's traditional banking secrecy.
In the wake of the Wegelin case, other Swiss banks will have to decide what to do. Some are already avoiding doing business with US clients, so much so that US citizens living in Switzerland find it extremely difficult to open a bank account or get a mortgage.
Others may consider the route taken by banking giant UBS in 2009, in which the bank admitted encouraging tax evasion and gave the details of more than 4,000 US account holders to the US authorities, together with a hefty $780m compensation payment.
There is also a certain amount of resentment among the Swiss banking community, many of whom feel that they are being unfairly targeted for practices which they claim are far more common in the US state of Delaware or in the City of London.
But with 13 other Swiss banks currently being investigated by US lawyers who have no intention of giving up, many in Switzerland also argue that the country's financial sector has more to offer than support for tax evasion. Stability and centuries of banking experience, for example.
The case of Wegelin is a stark one: a bank that first opened its doors in 1741 has had to close because it used the long tradition of Swiss banking secrecy to help clients avoid tax.
The message for other Swiss banks seems pretty clear. Either the secrecy goes, or the bank goes.