As I said yesterday, UBS has destroyed its reputation as a venerable Swiss bank by acting just like the American banks. For years, UBS has stacked its books with sub-prime mortgage-backed securities. And now, UBS is facing the biggest losses of any bank around the world.

Long time members of The Sovereign Society know that we never have recommended UBS as a Swiss bank for offshore accounts - and that was not only because of its monster size and impersonal service. What concerned us is the UBS anti-privacy policy.

The merger of Swiss Bank Corp and Union Bank of Switzerland creating UBS AG was approved by the U.S. Federal Reserve Board in 1999. But that was only after UBS agreed to provide the U.S. government with all information “necessary to determine and enforce compliance with . . . [U.S.] federal laws.”

This surrender went far beyond the normal financial information that Swiss banks must exchange with the U.S., under the current U.S.-Swiss Tax Treaty. This agreement also nullified Swiss bank secrecy laws that usually require a court order to release private banking information.

UBS caved in after the U.S. government threatened to shut down the bank’s extensive American financial operations. The UBS sell-out was bad news for financial privacy seekers -and it blew a large hole in the much vaunted concept of Swiss “bank secrecy.”

Then and now we advise U.S. and other potential depositors to avoid UBS AG and any Swiss bank that has active U.S. financial operations and offices beyond a mere “representative office.” (A similar privacy killing deal was made between the Fed and Credit Suisse when that leading Swiss bank merged with First Boston.)

Historically, there has long been a widespread belief that Switzerland is the place to safeguard cash and personal assets, especially in times of trouble. We think that still holds true.

Notwithstanding UBS, it is estimated that currently Swiss banks manage at least one third of all assets held offshore by the worlds wealthy. Total cash assets of the Swiss banking system are estimated at nearly US$2 trillion, while the value of total securities deposits are well over US$3 trillion. Assets under Swiss management have risen significantly in recent years, reaching a high of nearly US$4 trillion in 2007, according to the Swiss National Bank and the Swiss Bankers Association.

But the country’s political, financial and economic stability and strength are of far greater importance. Many of the world’s leading companies and hundreds of thousands of non-Swiss persons bank with the Swiss. Even the international intermediary banking institution for all other banks in the world, the Bank for International Settlements, is located in Basle, Switzerland.

Switzerland still is home to several hundred banks, including many small private and regional banks and more prudent large banks such as Bank Julius Baer, with branch offices in most of the world’s financial centers, from New York and Panama to Singapore and Hong Kong.

If nothing else, the UBS debacle is a stark warning to other Swiss bankers to stay with their traditional principles and, by all means, avoid Americanization.

BOB BAUMAN, Legal Counsel

P.S. To find banks around the world that have vigorously avoided Americanization and this sub-prime nonsense, consider joining us in Panama this May 14-17 for our Total Wealth Symposium. We’ve invited bankers from all over the world who can assist you with setting up your own bank account in some of the world’s strongest banking havens that vigorously guard your privacy, offshore investments and even your retirement account. Click here to learn more.