Wegelin & Co.

Last updated

Wegelin & Company.
Type Kommanditgesellschaft
Industry Financial services
Founded1741 (1741)
Founder Caspar Zyli
Defunct2013
HeadquartersMuseumstrasse 1, St. Gallen, Switzerland
Area served
Global
Key people
 RAUSHAN DEEP (Managing Partner)
Products
Number of employees

Wegelin & Co. is a former private bank [1] [2] [3] that was located in St. Gallen in the Canton of St. Gallen in Switzerland, and specialized in private banking and asset management. [4] [5] [6]

Contents

Founded by Caspar Zyli in 1741, the company was renamed Wegelin & Co. in 1893. The bank's legal name changed multiple times by incorporating the names of the senior personally liable partners. As of 2013, the bank's name was Wegelin & Co. Privatbankiers, Gesellschafter Bruderer, Hummler, Tolle & Co. [7] At the time of its closing, it was the oldest bank in Switzerland and the 13th oldest in the world.

History

Caspar Zyli Caspar Zyli.jpg
Caspar Zyli
Emil Wegelin (c. 1880s) Emil Wegelin.jpg
Emil Wegelin (c. 1880s)

The bank was founded as a partnership by a linen-cloth merchant by the name of Caspar Zyli (1717–1758), and was originally named Leinentuchhandel und Speditionshandlung ("Linen trade and freight forwarder"). The company provided banking services from the beginning. In 1798 Zyli's son acquired the Nothveststein building. In 1860 Zyli's nephew Emil Wegelin-Wild became a partner. He concentrated the firm's activities on asset management. In 1893, the firm was converted to a Kommanditgesellschaft and changed its name to the current one, which originated from Emil Wegelin-Wild. [8] [9]

In the 1990s, the bank underwent a management buyout orchestrated by one of its managing partners, Konrad Hummler. Eight partners controlled 80% of the bank, while the Wegelin family owned the other 20%. [9] This management structure was for the most part maintained until the bank closed.

By 2003 the firm was privately owned by five people, and remained private as of January 2012. [10] [11] [12] [13] The bank grew from a small bank with only 30 employees in 1990 to 700 employees and 13 offices as of 2011. New offices were opened in Zürich (1998), Lugano (2000), Bern (2002), Basel, Geneva and Locarno (all 2007), Chur (2009), Lucerne (2010), Winterthur (2011) and other cities. As of 2013, the personally liable partners were Otto Bruderer, Konrad Hummler, Steffen Tolle, Michele Moor, Christian Raubach and Christian Hafner.

Organization

All of the offices and branches of Wegelin & Co. are located in Switzerland, and the bank is headquartered in St. Gallen. Until its 2012 restructuring, the bank employed about 700 staff and had offices in Basel, Bern, Chiasso, Chur, Geneva, Lausanne, Locarno, Lugano, Lucerne, Schaffhausen, Winterthur and Zurich. Many employees came from the local University of St. Gallen, which has a good relationship with the bank. The bank managed client assets of over CHF 24 billion (figures dated to January 2012), and according to another source was also managing CHF 3 billion in pensions and moneys of private clients. [9] [14] [15]

Headquarters of Notenstein Privatbank, successor to Wegelin & Co. in St. Gallen Wegelin Hauptgebaude St Gallen Front.JPG
Headquarters of Notenstein Privatbank, successor to Wegelin & Co. in St. Gallen

In 2008 the firm was listed as an organisation whose size and manner of organisation suited the description of "boutique personal wealth management". The firm was relatively small, and accordingly operated within a specialized niche market.

Court case

Between 2002 and 2010, Wegelin & Co. assisted citizens of the United States in evading taxes on assets totalling over $1.2 billion. In early 2012, Wegelin & Co. transferred all its non-US activities, clients, and assets, and almost its entire staff, to its subsidiary Notenstein Privatbank. Notenstein Privatbank was subsequently sold to the Raiffeisen banking group. [16] [17]

In January 2013, the reduced Wegelin pleaded guilty to conspiracy in a New York court to assisting more than 100 American citizens to hide $1.2 billion from the Internal Revenue Service over a 10-year period. Although the bank's practice is legal under Swiss law, the bank agreed to pay $57.8 million (£36m; €44m, or about 5% of the $1.2 billion) in fines to US authorities. At about the same time that the plea agreement was announced, Wegelin & Co. declared that it would close. The Notenstein Privatbank continues to operate from the former Wegelin & Co. headquarters with its former 700 employees. Wegelin agreed to pay $57.8 million to the United States in restitution and fines. Otto Bruderer, a managing partner at the bank, said in court that "Wegelin was aware that this conduct was wrong." [18] [16] [19] [20] [21] [22]

American courts convicted Wegelin & Co. of money-laundering and tax evasion, and accordingly the bank's correspondent account held by UBS AG in Connecticut was fined $16 million by the federal courts. The bank argued that it only had branches in Switzerland, not the United States, and was, therefore only subject to Swiss law. In January 2013, Wegelin & Co. admitted to allowing more than 100 American citizens to hide approximately $1.2 billion from the Internal Revenue Service for almost 10 years. The bank agreed to pay $57.8m (£36m; 44m euros) in fines to US authorities: a restitution of $20 million, asset forfeiture of $15.8 million, and $22.05 million in other fines. [6] [23] [20]

In the New York court, the bank's representatives said the bank's practice was legal under Swiss law and common practice in Swiss banking, but admitted that their US customers violated US law. [18]

"Wegelin was aware that this conduct (of their customers) was wrong ... From about 2002 through to about 2010, Wegelin agreed with certain US taxpayers to evade the US tax obligations of these US taxpayer clients, who filed false tax returns with the IRS."—Otto Bruderer, a manager of Wegelin & Co. in NY court. [16]

After pleading guilty in a New York court to helping Americans evade their taxes, the bank announced that it would close permanently. It was the first non-American bank to plead guilty to tax evasion charges in the United States. [19]

Although it paid millions in fines, a lawyer involved in previous prosecutions of Swiss banks noted, "It is unclear whether the bank was required to turn over American client names who held secret Swiss bank accounts." [20]

Anthony Michael Sabino, professor at St. John's University's Peter J. Tobin College of Business noted, "Big banks have always been deemed off-limits for criminal prosecution. [The Wegelin case] teaches a lesson to small and mid-sized players but in sad contrast it sends the wrong message to big banks. That they can hide money, be caught, pay a fine and go back to business as usual." [24]

Restructuring

According to Reuters, "At the end of [January 2012], 270-year-old Wegelin said it had moved most of its employees, along with clients and assets of 21 billion Swiss francs, to Notenstein Privatbank," just a week prior to being inculpated, on 3 February 2012. Thus, the bank managed to transfer most of its business activities and employees—all non US related—to a legally different entity, Notenstein Privatbank, established by Wegelin & Co. as a subsidiary in 1968, but legally distinct. This subsidiary was also based in the same Nothveststein building, as the Wegelin & Co.'s employees were. The Notenstein Privatbank continues to operate from the former Wegelin & Co. headquarters with Wegelin's former 700 employees. [25] [21] [22] Also, while under a different name and legal identity, the bank's business continues with little impact.

After the transfer of the bulk of its activities including about 700 employees to Notenstein Privatbank, Wegelin & Co. only had 15 remaining employees as of February 2012. [26]

See also

Related Research Articles

<span class="mw-page-title-main">Morgan Stanley</span> American financial services company

Morgan Stanley is an American multinational investment bank and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in 41 countries and more than 75,000 employees, the firm's clients include corporations, governments, institutions, and individuals. Morgan Stanley ranked No. 61 in the 2021 Fortune 500 list of the largest United States corporations by total revenue.

<span class="mw-page-title-main">Banking in Switzerland</span>

Banking in Switzerland dates to the early 18th century through Switzerland's merchant trade and has, over the centuries, grown into a complex, regulated, and international industry. Banking is seen as emblematic of Switzerland. The country has a long history of banking secrecy and client confidentiality reaching back to the early 1700s. Starting as a way to protect wealthy European banking interests, Swiss banking secrecy was codified in 1934 with the passage of a landmark federal law, the Federal Act on Banks and Savings Banks. These laws, which were used to protect assets of persons being persecuted by Nazi authorities, have also been used by people and institutions seeking to illegally evade taxes, hide assets, or generally commit financial crime.

<span class="mw-page-title-main">HSBC</span> British multinational bank group

HSBC Holdings plc is a British universal bank and financial services group headquartered in London, England, with unique historical and business links to East Asia and a highly multinational footprint. It is the largest Europe-based bank by total assets, ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 trillion in assets under custody (AUC) and $4.9 trillion in assets under administration (AUA).

<span class="mw-page-title-main">Bank Hapoalim</span> Israeli bank

Bank Hapoalim is one of the largest banks in Israel, established in 1921. The bank offers a broad range of financial services to retail, corporate, and institutional customers, with a focus on retail banking services. It operates a network of more than 250 branches and offices in Israel and abroad. Bank Hapoalim is a prominent player in the Israeli banking sector, with a significant market share.

<span class="mw-page-title-main">Credit Suisse</span> Swiss multinational bank

Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and provides services in investment banking, private banking, asset management, and shared services. It is known for strict bank–client confidentiality and banking secrecy. The Financial Stability Board considers it to be a global systemically important bank. Credit Suisse is also a primary dealer and Forex counterparty of the Federal Reserve in the United States.

Julius Bär Group AG, known alternatively as Julius Baer Group Ltd., is a private banking corporation founded and based in Switzerland. Headquartered in Zürich, it is among the older Swiss banking institutions. In terms of assets under management, Julius Baer is number two among Swiss banks after UBS and the biggest pure-play private bank.

<span class="mw-page-title-main">Commerzbank</span> German commercial bank

Commerzbank AG is a global German universal bank headquartered in Frankfurt. The bank was founded in Hamburg in 1870 and is today among the largest credit institutions in Germany, with total assets of €534 billion as of the end of September 2022. With over 15 percent ownership, the Government of Germany is the bank's biggest shareholder.

Private banking is a general description for banking, investment and other financial services provided by banks and financial institutions primarily serving high-net-worth individuals (HNWIs) – those with very high income and/or substantial assets. Private banking is presented by those who provide such services as an exclusive subset of wealth management services, provided to particularly affluent clients. The term "private" refers to customer service rendered on a more personal basis than in mass-market retail banking, usually provided via dedicated bank advisers. It has typically consisted of banking services, discretionary asset management, brokerage, limited tax advisory services and some basic concierge services, typically offered through a gateway provided by a single designated relationship manager.

<span class="mw-page-title-main">2008 Liechtenstein tax affair</span> Series of tax investigations in numerous countries

The 2008 Liechtenstein tax affair is a series of tax investigations in numerous countries whose governments suspect that some of their citizens may have evaded tax obligations by using banks and trusts in Liechtenstein; the affair broke open with the biggest complex of investigations ever initiated for tax evasion in the Federal Republic of Germany. It is seen also as an attempt to put pressure on Liechtenstein, one of the remaining uncooperative tax havens, as identified by the Financial Action Task Force (FATF) on Money Laundering of the Paris-based Organisation for Economic Co-operation and Development, along with Andorra and Monaco, in 2007.

Bradley Charles Birkenfeld is an American private banker, convicted felon, and whistleblower. During the mid- to late-2000s, he made a series of disclosures about UBS Group AG clients, in violation of Swiss banking secrecy laws, to the U.S. government alleging possible tax evasion. Known as the 2007 "Birkenfeld Disclosure", the U.S. Department of Justice (DOJ) announced it had reached a deferred prosecution agreement with UBS that resulted in a US$780 million fine and the release of previously privileged information on American tax evaders.

<span class="mw-page-title-main">UBS</span> Multinational investment bank headquartered in Switzerland

UBS Group AG is a multinational investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres as the largest Swiss banking institution and the largest private bank in the world. UBS client services are known for their strict bank–client confidentiality and culture of banking secrecy. Because of the bank's large positions in the Americas, EMEA, and Asia Pacific markets, the Financial Stability Board considers it a global systemically important bank.

<span class="mw-page-title-main">Tax evasion in the United States</span>

Under the federal law of the United States of America, tax evasion or tax fraud, is the purposeful illegal attempt of a taxpayer to evade assessment or payment of a tax imposed by Federal law. Conviction of tax evasion may result in fines and imprisonment. Compared to other countries, Americans are more likely to pay their taxes on time and law-abidingly.

<span class="mw-page-title-main">Notenstein La Roche Private Bank</span>

Notenstein La Roche Private Bank was a Swiss private bank headquartered in St. Gallen and CHF 16.8 billion of client assets under management. The private bank, which had belonged to Raiffeisen (Switzerland) since 2012, was sold to Bank Vontobel in July 2018 and was fully integrated into that banking group as of 30 September 2018.

<span class="mw-page-title-main">Raiffeisen (Switzerland)</span> Cooperative of Swiss banks

Raiffeisen Switzerland is a cooperative of cooperatives – the union of all independent Swiss Raiffeisen banks. It bears responsibility for the business policy and strategy within the Raiffeisen Group. The 246 independent Raiffeisen banks of Switzerland are organised as cooperatives. With 896 branch offices in total, they make up the densest branch network of any Swiss bank. In the 21st century, the Raiffeisen Group has become the third-largest banking group in Switzerland with total assets currently at CHF 229 billion. Since June 2014, Raiffeisen has been classified as one of Switzerland's systemically important banks and must therefore meet special requirements in terms of capital. Raiffeisen Switzerland has 3.8 million clients in Switzerland, of whom 1.9 million are cooperative members and thus co-owners of their regional Raiffeisen banks.

Hyposwiss Private Bank Ltd was a Swiss private bank, located in Zurich, that closed in 2013.

<span class="mw-page-title-main">UBS tax evasion controversies</span>

The Swiss investment bank and financial services company, UBS Group AG, has been at the center of numerous tax evasion and avoidance investigations undertaken by U.S., French, German, Israeli, and Belgian tax authorities as a consequence of their strict banking secrecy practices.

Adrian Künzi is a Swiss private banker. He was appointed CEO of Notenstein Private Bank in 2012. Since 2018, he has been working for Bank UBP. Since autumn 2020 he has been in charge of the bank's European Markets.

<span class="mw-page-title-main">Alternative Bank Switzerland</span>

Alternative Bank Switzerland (ABS) is a sustainability-oriented bank based in Olten, Canton of Solothurn, in Switzerland.

<span class="mw-page-title-main">Swiss Leaks</span> 2015 expose of tax avoidance scheme

Swiss Leaks is the name of a journalistic investigation, released in February 2015, of a giant tax evasion scheme allegedly operated with the knowledge and encouragement of the British multinational bank HSBC via its Swiss subsidiary, HSBC Private Bank (Suisse). Triggered by leaked information from French computer analyst Hervé Falciani on accounts held by over 100,000 clients and 20,000 offshore companies with HSBC in Geneva, the disclosed information was then called "the biggest leak in Swiss banking history".

Walser Privatbank is a bank with headquarters in Hirschegg, Austria. It was originally founded in 1894 as the regional Spar- und Darlehenskassenverein Mittelberg. Today's business focus has shifted to private banking, especially for customers with assets of at least 300,000 Euros from Germany. Due to its location in the Kleinwalsertal customs exclusion area, Walser Privatbank lies in German economic territory, but not under the jurisdiction of German customs. "The Kleinwalsertal benefited from Austrian banking secrecy for many years as a banking location."

References

  1. ↑ "Swiss bank Wegelin to close after guilty plea". Reuters. 4 January 2013. Retrieved 18 March 2023.
  2. ↑ Neate, Rupert (4 January 2013). "Oldest Swiss bank Wegelin to close after admitting aiding US tax evasion". The Guardian. ISSN   0261-3077 . Retrieved 18 March 2023.
  3. ↑ Bray, Von Chad. "Älteste Schweizer Bank Wegelin schließt nach Steuerskandal". WSJ. Retrieved 18 March 2023.
  4. ↑ Van Voris, Rob (25 April 2012). "Wegelin & Co. Must Forfeit $16 Million, U.S. Judge Rules". Bloomberg. Retrieved 4 January 2013.
  5. ↑ "US tax scandal brings down Wegelin". Swiss Broadcasting Corporation. 27 January 2012. Retrieved 10 July 2012.
  6. 1 2 "Raiffeisen Buys Bank Wegelin's Non-US Operation". The Wall Street Journal. 27 January 2012. Retrieved 10 July 2012.
  7. ↑ "Handelsregister des Kantons St. Gallen". Powernet. Retrieved 7 January 2013.
  8. ↑ The Bankers' almanac and year book: Volume 2 1992 – Retrieved 11 July 2012 →
  9. 1 2 3 Bain, David (14 April 2008). "Wegelin emerges as Switzerland's best-kept secret". Financial News. Retrieved 11 July 2012.
  10. ↑ A Thierstein, EW Schamp – Innovation, finance, and space Institut für Wirtschafts- und Sozialgeographie, Johann Wolfgang Goethe-Universität, 2003
  11. ↑ S Blankson – The Practical Guide to Total Financial Freedom, Volume 5 Lulu Press Incorporated, 30 June 2005. Retrieved 17 July 2012 ISBN   1411620542
  12. ↑ CUREM (Center for Urban & Real Estate Management) Zurich – Immobilienwirtschaft aktuell: Beiträge zur immobilienwirtschaftlichen Forschung 2011 vdf Hochschulverlag AG, 2011. Retrieved 17 July 2012 ISBN   3728133876
  13. ↑ The united States Dept. of Justice 2 February 2012. Retrieved 17 July 2012
  14. ↑ The united States Dept. of Justice – 2 February 2012
  15. ↑ schweizer-banken.info. Retrieved 10 July 2012
  16. 1 2 3 Neate, Ruper (4 January 2013), "Oldest Swiss bank Wegelin to close after admitting aiding US tax evasion", The Guardian
  17. ↑ "Wegelin buyer Raiffeisen cuts US client ties". Reuters. 5 February 2012. Retrieved 4 January 2013.
  18. 1 2 Foulkes, Imogen. "Swiss banks' unease over Wegelin". BBC. Retrieved 6 January 2013.
  19. 1 2 "Swiss bank Wegelin to close after US tax evasion fine". BBC. 4 January 2013. Retrieved 4 January 2013.
  20. 1 2 3 "Switzerland's oldest bank Wegelin to close after pleading guilty to aiding US tax evasion". The Daily Telegraph. 4 January 2013. Retrieved 4 January 2013.
  21. 1 2 History: From "Nothveststeain" to Notestein Private Bank, Notestein.ch, 2013
  22. 1 2 Notenstein at a Glance, Notestein, 2013
  23. ↑ L Browning 3 February 2012 Reuters. Retrieved 10 July 2012
  24. ↑ Touryalai, Halah (4 January 2013), "Tale of Two Swiss Banks: Why Wegelin Failed And UBS Survived Tax Evasion Charges", Forbes
  25. ↑ "Wegelin buyer Raiffeisen cuts US client ties". Reuters. 5 February 2012. Retrieved 4 January 2013.
  26. ↑ "213 Schritte in den Untergang" (in German). WOZ. 2012. Retrieved 6 January 2013.

Wegelin and Co.

47°25′35″N9°22′39″E / 47.42631°N 9.377599°E / 47.42631; 9.377599

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.