French court slashes UBS tax penalty to €1.8bn

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UBS has been ordered to pay €1.8bn by a French appeals court for helping rich clients evade tax, less than half the penalty the Swiss bank initially faced in a legal case that has dogged the lender for seven years.

After several delays to the case, a judge at the Paris appeals court announced the size of the penalty on Monday afternoon.

UBS was found guilty in 2019 of helping rich clients evade paying tax following a landmark trial in Paris. The court also ordered the bank to pay a record €3.7bn fine and an additional €800m in damages, a penalty that the bank appealed against.

The penalty handed down by the French appeals court on Monday consists of €800m in civil damages and a €1bn confiscation order. UBS has five days to appeal against the ruling and take it to France’s highest court.

“The bank takes note of this decision,” said Herve Temime, a lawyer representing UBS.

“Compared to the first instance ruling, there is a financial gain of €2.7bn, but it is a criminal conviction and therefore we will make our decision very quickly.”

The 2019 ruling capped a seven-year investigation by French authorities that saw the bank accused of using James Bond-like tactics to solicit clients illegally and help them launder money.

Prosecutors said UBS bankers had used self-erasing hard drives, business cards without logos and evasive tactics to move about France in secret to enlist clients illegally at corporate events.

Whistleblowers alleged that UBS bankers solicited clients at operas, during hunting trips and at the French Open tennis tournament.

UBS argued that while its bankers did come to France and attend social events, prosecutors lacked evidence of the solicitation.

At the time, Sergio Ermotti, UBS’s then chief executive, described the “superficial nature of the verdict [as] astounding” in a memo to staff.

The case was a blot on Ermotti’s nine-year record at the helm of UBS and has dogged his successor, Ralph Hamers, who took over last year.

After appealing against the original fine, UBS set aside just €450m in provisions to meet legal costs associated with the case.

During the appeal, the French authorities reduced the amount they were demanding to a maximum of €3.2bn, made up of a €2.2bn fine and up to €1bn in civil damages.

Earlier this year, UBS attempted to overturn the original ruling on constitutional grounds, but a French court rejected the challenge.

The French penalty followed similar tax judgments against UBS in the US, where the bank was ordered to pay $78m in 2009, and in Germany, where it submitted to a €300m fine in 2014. A parallel case in Belgium was settled last month, with UBS agreeing to pay €49m.

Shares in UBS jumped almost 3 per cent following the announcement of the latest ruling.

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