Swiss Banks Rebound From Italian Amnesty Debacle
Tuesday, January 19, 2010

Morgan Stanley has estimated in a research report that the Italian 'offshore' tax amnesty will have been more successful than originally estimated, with up to a quarter of the EUR400bn estimated 'illegitimate' overseas financial assets of Italians having been declared to the authorities by the time that the amnesty finally comes to an end this April.

Originally the amnesty ran until mid-December, with a fine of just 5% of undeclared assets, but was extended to April, with a fine of 6%. It is thought that about two-thirds of the declared assets will have been repatriated to Italy, since in the early stages of the amnesty Switzerland, home of the bulk of the undelcared assets, did not have an information-sharing agreement with Italy, which would have permitted the assets to remain where they were. But after the OECD removed Switzerland from its 'grey' list of countries in September, the repatriation rule no longer applies.

Although Morgan Stanley estimates that top Swiss banks will have seen lost assets topping EUR15bn as a result of the amnesty, it is still estimating that the banks will have seen an increase in assets under management in Q4 of 2009 as a result of strong inflows from other parts of the world.

“Overall, we see a long-term decline of the European offshore business, although winners may be able to offset this by Asia/BRIC wealth, market share gains and mergers and acquisitions,” said the bank.