Some bankers are of the opinion that that since the Foreign Account Tax Compliance Act (FATCA) will require overseas banks to report US clients to the Internal Revenue Service, but its loose definition of who is a US citizen will create a huge administrative burden and could push non-residents to slash their US exposure.

Reuters quoted Ivan Adamovich, head of the Geneva branch of Switzerland’s oldest bank, Wegelin as saying: "Wegelin believe this is a regulatory monster. It is an important regulatory burden not only on Swiss banks but all over the world."

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"We decided to tell our clients not to invest in US securities any more. If clients want exposure to US securities we would buy an ETF which does not have a US regulatory base," Adamovich added.

Few other banks believe that the scheme will be extremely costly to implement, and some say that as the legislation stands, any bank with a client judged to be a US citizen will be also obliged to supply documentation on all other clients.

Yves Mirabaud, managing partner at Mirabaud & Cie and Swiss Bankers Association board member said that FATCA will cost 10 times to the banks than it will generate for the IRS. It is going to be extremely complicated.

Howeevr, Alexandre Zeller, head of the private banking business for Europe, the Middle East and Africa at HSBC is of the opinion that avoiding US assets will not be an option for global institutions.

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"We are a global bank… There is no way we are going to say we don’t do business with the US so clearly it’s about finding the best way to implement this new regulation," he said.