UPDATE 1-Key Swiss report raps government over UBS crisis

* Parliamentary report says govt failed to take swift action

* Says govt did not recognise implications of U.S. tax probe

* Calls on regulator to find out what execs knew

(Adds details, background)

BERNE, May 31 (BestGrowthStock) – The Swiss government failed to
take swift action to prevent a credit and tax crisis that
endangered the survival of banking giant UBS (UBSN.VX: )(UBS.N: ) in
2008-2009, a key parliamentary report said on Monday.

The actions of UBS’ top management were not at the centre of
the parliamentary inquiry. But the report called on financial
regulator FINMA to find out to what extent UBS executives knew
of the U.S. tax violations carried out at their bank.

FINMA said in a statement on Monday it would examine the
conclusions of the report and state its position on the findings
and recommendations by the end-2010 deadline.

The report, the result of a 15-month-long inquiry by the
parliament’s two Control Committees and 59 closed-door hearings
with senior Swiss officials, showed that the government waited
for five months before decisively stepping in to tackle UBS’s
credit woes in September 2008.

Berne also failed to recognise the wide implications into a
U.S. tax investigation into UBS — the world’s No.2 wealth
manager by assets — that eventually pierced a hole into
Switzerland’s treasured bank secrecy, the report added.

“As with several other countries, Switzerland failed to
detect the crisis and did not take adequate preventive measures
early enough,” the committees said in a joint statement.

“The significance of the transfer of the bank data of some
U.S. clients of UBS was not recognised until too late.”

The Swiss government offered 6 billion Swiss francs to UBS
in October 2008 to prevent the bank from collapsing under more
than $50 billion of writedowns on toxic U.S. assets.

Four months later, regulator FINMA found itself obliged to
order UBS to hand over some bank client data to U.S. tax
authorities to avert criminal charges against the bank, a breach
of Swiss bank secrecy.

HEATED DEBATE

The findings came as the Swiss parliament prepared for a
heated debate on whether to approve a Swiss-U.S. treaty to end
the U.S. tax case against the banking giant.

The parliament’s upper house is due to discuss whether to
support the Swiss-U.S. tax deal over UBS on Thursday. The debate
will then move to the lower house next week.

The chances that the deal will go through parliament rose
after Switzerland’s largest party, the right-wing SVP, made a
U-turn earlier in May in support of the deal.

Support for the deal would end a Swiss legal deadlock and
allow Switzerland to fulfil a commitment to pass on to U.S. tax
authorities the names of 4,450 U.S. clients of UBS holding
secret accounts in Switzerland. [ID:nLDE64B1HV]

But the beleaguered agreement still faces potential hurdles
as the Social Democrats, the country’s second-largest political
force, may seek to push through a nation-wide referendum that
would push the data exchange beyond an agreed end-of-August
deadline.

Swiss government officials have said parliamentary backing
is needed to avoid a U.S. backlash against the country, the
world’s second largest wealth manager, and possible negative
repercussions on the Swiss economy.

Stock Market News

(Reporting by Lisa Jucca and Albert Schmieder; Editing by Hans
Peters)

UPDATE 1-Key Swiss report raps government over UBS crisis