atans1

GIC: Can UBS survive US indictment?

In GIC on 30/01/2010 at 5:41 am

Great time for UBS’s survival to be questioned, when bonds held by GIC must be converted into UBS shares by 5 March, 2010.

[Reminder: In December 2007, GIC invested 11 billion Swiss Francs for these bonds that would give it 9% of UBS. It later had to invest an undisclosed amount to prevent a dilution of its stake when UBS called for a rights issue to cover mounting losses. Later the Swiss government had to take a 9% stake to cover yet more losses.]

Last August, it was feared that UBS would not survive if it were indicted in the United States for failing to provide details of  tax evasion by US citizens (Note the concern abt UBS not surviving the indictment was not reported here: both in MSM amd bloggers). Its failure could have undermined Switzerland’s economy. And of course Singapore’s reserves.

Now: “The Swiss government on Wednesday backed off an agreement with the United States that required it to hand over the names of wealthy American clients of the Swiss bank UBS who were suspected of tax evasion.

‘The announcement, which came after two Swiss courts ruled that the disclosure of client names would be illegal because it would violate the country’s secrecy laws, threatened to open a new front in the investigation into UBS by the Justice Department.

‘While the Swiss cabinet … would continue talks with the United States on the matter … there was a risk that the United States would resume civil proceedings filed against UBS in a Florida court last year. That case sought to force UBS to disclose the names of 52,000 wealthy American clients suspected of tax evasion through UBS’s private bank.

‘That lawsuit was suspended in August when the Swiss government, acting on behalf of UBS during months of intense negotiations, promised to hand over 4,450 UBS client names.” Full article

So if no new settlement is reached, UBS can be indicted again. And the issue of whether it can survive will again be asked.

This is one jinked investment.  Time for MM (GIC’s chairman) or Tony Tan (executive director) to go an visit some holy man to ask for the bad luck to go away?

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