BERN/ZURICH, June 13 (Reuters) - A Swiss parliamentarycommittee said on Thursday that lower house lawmakers shoulddecline to debate a bill which would allow banks to sidestepstrict secrecy laws and pass information to U.S. authorities.
Switzerland has built the world's biggest offshore financialcentre, with more than $2 trillion in assets, on the back of itsconfidentiality laws, but has come under fire since thefinancial crisis as struggling economies elsewhere seek to plugbudget gaps by clamping down on tax evasion.
If the lower house were to follow the recommendation not todebate the draft law, or if they reject it next week, it wouldseverely limit Switzerland's options to free its banks from thethreat of criminal action from the United States.
The committee's recommendation was delivered after hours ofdebate behind closed doors, with no reasons publicly given.
The lower chamber will have to reject the recommendation ifit is to proceed with the debate, as the Swiss government seeksa way to draw a line under a protracted tax dispute withWashington. While it is unusual for lawmakers to reject aparliamentary committee recommendation, it is not unknown.
On Wednesday, members of Switzerland's upper chamber voted24 to 15 to pass the bill.
The draft law would let banks avert criminal prosecution byhanding over information and striking deals with U.S.prosecutors, which one lawmaker earlier this week called a"choice between the plague and cholera". The banks are stillexpected to face heavy fines that could cost them a total of upto $10 billion.
While banks would not be allowed to hand over client names,the proposal would allow them to pass enough other informationto allow U.S. authorities to identify them.
U.S. prosecutors have more than a dozen banks under formalinvestigation, including Credit Suisse, Julius Baer, the Swiss arm of Britain's HSBC, privatelyheld Pictet in Geneva and local government-backed ZuercherKantonalbank and Basler Kantonalbank.
Switzerland's biggest bank, UBS, was forced in2009 to pay a fine of $780 million and deliver the names of morethan 4,000 clients to avoid indictment, giving the U.S.authorities information that allowed them to pursue other Swissbanks.
Wegelin, Switzerland's oldest bank, shut its doors earlierthis year and paid $58 million to U.S. authorities afterpleading guilty to helping wealthy Americans evade taxes throughsecret accounts.
HSBC Holdings (HSBA)