By Warren Giles
Feb. 18 (Bloomberg) -- Liechtenstein banks traded on the Swiss Exchange declined after reports that German police carried out raids on residents accused of illegally funneling money to the alpine tax haven.
VP Bank Group, the first Liechtenstein-based company to list shares in Zurich, fell 7.6 percent to 250 francs, the steepest drop since 2002. Liechtensteinische Landesbank AG, the principality's oldest bank, shed 11 percent to 85.95 francs, the most since the shares were listed in 1993. Neither bank has been named by authorities in connection with the raids.
German prosecutors are investigating hundreds of people for possible tax evasion in connection with a raid on the Cologne home of Deutsche Post AG Chief Executive Officer Klaus Zumwinkel, who resigned last week. Adding to pressure on Liechtenstein banks, authorities in the northern German town of Rostock in a separate case arrested three men suspected of using stolen client data to extort money from LLB.
``Obviously it's bad because if you're a client there you don't know whether the German tax authorities have your details,'' said Claudia Meier, an analyst at Bank Vontobel in Zurich. ``You have to assume that we'll see some decline in client inflows going forward.''
German Raids
The raids are based on a list of alleged tax-evaders for which Germany's foreign intelligence service paid a former employee of another Liechtenstein bank, LGT Group, at least 4 million euros ($5.9 million), the Financial Times said today, citing an unidentified person. The list is thought to include account details of about 750 German nationals who put money in trusts managed by LGT, the FT said.
Police nationwide planned to execute some 900 court-ordered search warrants, beginning with an initial round of 125 searches of private homes at a rate of 20 to 25 a day, the newspaper Sueddeutsche Zeitung reported today, citing people close to the investigation. Homes and business are being searched in and around Frankfurt, Munich, Hamburg and Ulm, business newspaper Handelsblatt said.
LGT, which is owned by the principality's ruling family, said Feb. 15 that client data stolen in 2002 may have been passed on illegally after the former employee who stole the records was convicted. LGT said a link between the stolen data and the German probe wasn't ``conclusively confirmed.''
Rostock Arrests
The arrests by Rostock authorities, which were made Feb. 15, are unrelated to the raids, the local prosecutor said today. The three men, together with a fourth accomplice arrested earlier, are suspected of extorting about 9 million euros from LLB since 2005, in return for about 1,600 account statements. The remaining 400 statements were scheduled to be handed over next year for an additional 4 million euros, the prosecutor said.
LLB spokesman Cyrill Sele declined to comment on the arrests announced by the Rostock prosecutor because the investigation is ongoing. VP Bank spokeswoman Tanja Gartman also declined to comment for this article.
LLB managed client assets worth 60.6 billion francs at the end of June, compared with 39.6 billion francs at VP Bank and 99.7 billion francs at LGT.
Liechtenstein, with a population of 35,000, lies on Switzerland's northeastern border. It has developed financial services into an industry that accounts for 30 percent of gross domestic product.
The principality is listed by the Paris-based Organization for Economic Co-operation and Development as among the ``offshore financial centers'' in which ``significant restrictions on access to bank information for tax purposes remain.''
To contact the reporter on this story: Warren Giles in Geneva at wgiles@bloomberg.net
Source: Bloomberg
Monday, February 18, 2008
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