UBS shares drop after US indicts top banker

Zurich: Shares in UBS fell yesterday after US authorities charged the Swiss bank's wealth management boss with helping Americans hide $20 billion from the taxman, putting Swiss bank secrecy laws in the spotlight again.

The indictment of board member Raoul Weil could scarcely have come at a worse time for UBS, which is trying to rebuild client confidence after unloading $60 billion of toxic assets last month in a deal with the Swiss government and central bank.

UBS shares were down 4 per cent at 15.21 Swiss francs at 1057 GMT, while the DJ Stoxx European banks sector index was down 2 per cent.

Analysts said UBS's offshore business in the United States only accounted for about 2 per cent of private banking assets, but the bank could ill afford further damage to its reputation.

"The direct implication on earnings is not big," Dirk Becker, an analyst with Kepler Equities said in a research note, but added: "We are worried about the ongoing negative headlines and possible actions of other countries."

Switzerland's bank secrecy rules, which in darker times enabled Nazi Germany to hide assets stolen from Holocaust victims, are also facing renewed pressure from its European neighbours, especially Germany, who say the rules are being abused by dishonest clients.

Switzerland is estimated to hold about $2 trillion or 27 per cent of global offshore assets.