US inquiry into Credit Suisse over tax evasion

Credit Suisse revealed yesterday that it had been drawn into US investigations of tax evasion that has already cost its rival UBS $780m (£483m).

The Swiss bank said it was notified on Thursday that it was a target of a Department of Justice (DoJ) inquiry into "historical private banking services provided on a cross-border basis to US persons".

The bank had previously said it was co-operating with US tax inquiries but the DoJ's action marks an intensification of the inquiry that could cost Credit Suisse financially and sap management's time.

UBS, Switzerland's biggest bank, succumbed after months of US pressure in 2009 by paying a $780m fine and handing over data on almost 5,000 accounts.

Those actions settled US charges that UBS aided tax evasion but they were a big blow to the secrecy that had helped to build Switzerland's huge banking industry.

Since settling with UBS, the DoJ has conducted a wider investigation into whether the Swiss banking sector has helped clients to dodge US taxes.

Cash-strapped governments are putting pressure on offshore banking centres such as Switzerland because they believe wealthy people are stashing money there to evade taxes.

Switzerland has been trying to reach a deal with the US to get the investigation dropped in return for banks paying fines, handing over client names to the Internal Revenue Service (IRS) and axing offshore services for US citizens.

The US indicted four former and current Credit Suisse bankers in February, claiming they helped Americans to evade taxes. One of the bankers alleged the practice was common at Credit Suisse.

When Credit Suisse started shutting its US cross-border business in 2008, it had $3bn in "thousands" of accounts not declared to the IRS, the indictment claimed.

The bank said at the time it was not the subject of the investigation and it was co-operating with the US.