The financial cost of the deal was not disclosed. 

“As a consequence of the increasingly threatening situation surrounding Wegelin & Co Private Bankers in the US tax dispute, the bank's managing partners have taken a radical step – a substantial majority of clients and staff will be transferred to Notenstein Private Bank, which will become a 100 per cent subsidiary of Raiffeisen for an undisclosed sum,” the bank, which was founded in 1741, said in a statement.

The sale announcement is arguably the most dramatic example yet of a Swiss bank’s response to increasingly tough pressure on Switzerland’s bank secrecy laws by countries such as the US. The Wegelin name has, to all intents and purposes, been removed from the industry. 

The move comes after reports that the US authorities are moving to taking legal action against Wegelin on charges that it enabled US citizens to evade tax. The US is carrying out a criminal probe into 11 Swiss and Swiss-style banks, including Wegelin; they are suspected of selling offshore tax evasion services to tens of thousands of wealthy US citizens. Inquiries, growing out of scrutiny of UBS, are focused on Credit Suisse and Basler Kantonalbank among others. More than a week ago, Wegelin confirmed that three of its employees had been indicted by US prosecutors in Manhattan for selling tax evasion services. The charges outlined the sales role of senior unnamed partners at the bank.

Sale

In its statement today, Wegelin said: “This transaction enables Raiffeisen to substantially strengthen its position in wealth management. Wegelin & Co Private Bankers will remain in existence to finalise the closure of all remaining US client relationships and to continue the negotiations with the US justice authorities.”

“In the current dispute between Switzerland and the USA, Wegelin & Co, Switzerland's oldest bank, is confronted with circumstances that make radical and permanent steps indispensable to protect the interests of its clients and employees,” it continued.

As of today, the bank will “transfer a substantial majority of its clients and staff to Notenstein Private Bank”.

“With the transfer, Wegelin & Co's asset management division will be merged with Wegelin Fund Management and reformed as 1741 Asset Management, a 100 per cent subsidiary of Notenstein Private Bank."

Wegelin said the managing partners with unlimited liability will remain with Wegelin & Co to follow through the legal negotiations with the US justice authorities and finalise the closure of all remaining US client relationships.

"As managing partners with unlimited liability, we will fulfil our responsibilities and stand by Wegelin & Co's obligations. We are determined to see the legal negotiations through to the end. At the same time, it is our duty to guarantee our clients and staff the greatest possible security. Our managing partners are unanimous on that," confirmed Wegelin & Co's senior managing partner, Dr Konrad Hummler.

Dr Pierin Vincenz, chief executive of the Raiffeisen Group, has been appointed chairman of the board of Notenstein Private Bank; the CEO is Dr Adrian Künzi. "Our most urgent task is to retain the trust of the clients and employees," said Künzi. "At the same time, the change of ownership gives us an opportunity to reorganise and create a new structure for modern wealth management under the current regulatory requirements,” the statement said.

“With the complete takeover of Notenstein Private Bank by Raiffeisen, the position of the clients and external business partners has been secured in all respects. At the same time, Raiffeisen can implement its long-desired expansion in private banking,” the statement said.

“Extremely painful”

"I never could have imagined that we, as owners of Switzerland's oldest bank, would ever have considered selling. The extraordinarily difficult situation and threat to the bank brought about by the legal dispute with the US has forced me and my longtime associate Otto Bruderer to take this extremely painful step together with the other managing partners. With the acquisition through Raiffeisen, we have been able to find a sustainable solution for our clients and staff with a trustworthy and competent partner, despite the enormous pressure. That is a great relief for all the managing partners,” Hummler said.