Swiss banks no longer accept business from US clients?

UBS AG's high-profile spat with the U.S. Internal Revenue Service has made some of Switzerland's other banks to be wary of looking after U.S.-based clients, prompting some to stop taking money from Americans altogether and threatening the country's image as a private banking center.

UBS is currently locked in talks with the IRS which wants access to 52,000 client accounts in a moved aimed at rooting out possible tax fraud, possibly breaching Switzerland's own banking secrecy laws. But no matter what the outcome, U.S. clients are regarded as an expensive liability by some Swiss private banks. Thus, a spokesman for the state-controlled bank confirmed that Zurich-based Zuercher Kantonalbank no longer accepts business from U.S. clients.

One day after reaching a deferred prosecution with the Department of Justice, agreeing to pay a $780 million fine and handing over 250 sets of client data, UBS was served with a so-called John Doe summons by the U.S. The case is expected to be settled out of court before the two face off in Miami district court Aug. 3, according to experts and analysts.

As fear over further U.S. moves spreads, the Swiss-American Chamber of Commerce in Zurich said lobbying efforts are underway to end the blanket bans of U.S. business.

In addition, the U.S. push on UBS will almost certainly translate into a revision of existing qualified intermediary, or QI, agreements, which govern what types of business foreign banks can undertake in the U.S. Revised QI agreements are likely to contribute to an easing of tensions over American business in Switzerland as well, and prompt Swiss banks to adapt their rules accordingly.