Texon Finanzanstalt: the bank within the bank

Foundation in Vaduz, April 1961

Texon Finanzanstalt was established in Liechtenstein in April 1961.¹ Its legal form, the Anstalt (establishment), was a creation of the Liechtenstein Persons and Companies Act of 1926, a flexible vehicle without members whose founder could keep all rights for himself or transfer them to a beneficiary. Its registered office was in Vaduz, where a local lawyer or trust company provided the address and the board members required by law. Its real direction lay in Chiasso. The Federal Banking Commission described Texon as a vehicle by which the branch management raised "funds, mainly of Italian origin" and granted credits "outside the control of the general management and the board of directors" of the Kreditanstalt.² Contemporary observers coined the phrase that has remained attached to the affair: Texon was "a bank within the bank".³

The ownership of Texon remained obscure throughout. Formally, the establishment was held through the lawyers who had founded it. In substance it served the Chiasso branch, which decided on its business and guaranteed its obligations. This duality was the core of the construction. As long as Texon was a separate legal person in Liechtenstein, its liabilities did not appear in the Kreditanstalt's balance sheet and its loans were not subject to the bank's credit committees. As long as the branch guaranteed those liabilities in the name of the Kreditanstalt, the depositors believed that they were exposed to one of the safest banks in the world.

The mechanism: fiduciary deposits and secret guarantees

The structure built on a product that Swiss banks offered widely in the 1960s and 1970s, the fiduciary deposit (Treuhandanlage, deposito fiduciario). In a fiduciary deposit, the client instructs the bank to place money in the bank's own name but for the client's account and at the client's risk with a third party, usually a foreign bank. The client receives the interest paid by the third party, less a commission, and the bank shows the transaction off its balance sheet. Because the money is invested abroad, the interest was not subject to the Swiss withholding tax, which the Act of 1965 levies on interest from customer deposits with domestic banks and which today stands at 35 per cent. This exemption made the product attractive to foreign clients.⁴ Weisscredit had used the same argument, recommending its Liechtenstein establishment to clients as an investment free of withholding tax.⁵

At the Chiasso branch, Italian clients placed money as fiduciary deposits with Texon, often at interest rates above those that a Swiss bank deposit would have paid. The decisive element was the guarantee. According to the Federal Banking Commission, "the Chiasso branch issued guarantees that were kept secret from the head office in Zurich".⁶ The depositors therefore held, in their own understanding, a claim backed by the Kreditanstalt. The bank's head office, for its part, knew of fiduciary business at Chiasso but not of the guarantees that turned this business into a direct exposure of the bank. Texon then used the money to grant loans and acquire participations. Its balance sheet was neither published nor audited by a Swiss auditor, and its losses therefore remained invisible to everyone except the managers in Chiasso.

Element Function Visible to Zurich? Italian depositor Places funds as fiduciary deposit Yes, as client Chiasso branch Books deposit off balance sheet Partly Texon (Vaduz) Receives funds, lends to companies No Branch guarantee Backs Texon's obligations No Italian companies Borrow from or are held by Texon No

Notes

1. Le Temps, "Grandes affaires économiques suisses (26)" (above): Texon was created in April 1961 in Liechtenstein. ↩
2. EBK, Jahresbericht 1977 (above), 23: Texon-Finanzanstalt raised "Gelder, hauptsächlich italienischen Ursprunges" and granted credits "ausserhalb der Kontrolle von Generaldirektion und Verwaltungsrat der SKA". On the Anstalt under the Liechtenstein Personen- und Gesellschaftsrecht of 20 January 1926 (PGR), LGBl. 1926 No. 4, Arts 534 ff.. ↩
3. SWI swissinfo.ch, "La grande leçon du scandale Texon" (above) ("banque dans la banque"); Ente Ticinese per il Turismo, "Lo 'scandalo' di Chiasso" (above) ("una vera 'banca nella banca'"). In the National Council debate of 22 June 1977 the phrase "une banque érigée dans la banque" was also used, as reported in La Liberté (Fribourg), 22/23 June 1977, https://doc.rero.ch/record/282825/files/1977-06-23.pdf. ↩
4. Federal Act on Withholding Tax of 13 October 1965 (WTA), SR 642.21, Art. 4(1)(d) ("Kundenguthaben bei inländischen Banken und Sparkassen"), https://www.droit-bilingue.ch/de-it/6/64/642.21-4-7.html, and Art. 13(1)(a) ("35 Prozent der steuerbaren Leistung"), https://www.droit-bilingue.ch/de-it/6/64/642.21-13-17.html. Fiduciary deposits placed with foreign banks fall outside Art. 4(1)(d) because the debtor is foreign. ↩
5. EBK, Jahresbericht 1977 (above), 22–23: the Schaan establishment was recommended by Weisscredit "ihrer Kundschaft als verrechnungssteuerfreie Anlagemöglichkeit". ↩
6. EBK, Jahresbericht 1977 (above), 23–24: "Die Filiale Chiasso erteilte … Garantien, die vor dem Hauptsitz in Zürich geheimgehalten wurden." ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.