French justice reduces UBS’s tax fine to 1.8 billion euros

UBS was ordered to pay 1.8 billion euros by a French appeals court for helping wealthy clients evade tax, less than half of the penalty initially imposed on the Swiss bank in a court case that weighed on the lender for seven years.

After several delays in the case, a judge of the Paris Court of Appeal announced the amount of the penalty on Monday afternoon.

UBS was convicted in 2019 of helping wealthy clients evade tax payment following a landmark lawsuit in Paris. The court also ordered the bank to pay a record fine of 3.7 billion euros and an additional 800 million euros in damages, a penalty against which the bank has appealed.

The sanction pronounced Monday by the French court of appeal consists of 800 million euros in civil damages and a confiscation order of one billion euros. UBS has five days to appeal the decision and take it to the highest French court.

“The bank takes note of this decision”, declared Hervé Temime, lawyer representing UBS.

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

The 2019 decision ended a seven-year investigation by French authorities that saw the bank accused of using James Bond-style tactics to illegally solicit customers and help them launder money.

Prosecutors said UBS bankers used self-erasing hard drives, logo-less business cards and evasive tactics to travel around France in secret to illegally enlist clients at corporate events .

Whistleblowers alleged that UBS bankers solicited clients at opera houses, on hunting trips and at the Roland Garros tennis tournament.

UBS argued that even though its bankers came to France and attended social events, prosecutors lacked evidence of the solicitation.

At the time, Sergio Ermotti, then managing director of UBS, described the “superficiality of the verdict [as] astounding ”in a note to staff.

The affair was a stain on Ermotti’s nine-year record as head of UBS and weighed on his successor, Ralph Hamers, who took over last year.

After appealing the initial fine, UBS only set aside 450 million euros to cover legal costs related to the case.

During the appeal, the French authorities reduced the amount claimed to a maximum of 3.2 billion euros, consisting of a fine of 2.2 billion euros and up to 1 billion euros in damages -civil interests.

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

The French sanction follows similar tax rulings against UBS in the United States, where the bank was ordered to pay $ 78 million in 2009, and in Germany, where it was fined $ 300 million. euros in 2014. A parallel case in Belgium was settled last month, with UBS agreeing to pay 49 million euros.

UBS shares jumped nearly 3 percent after the latest move was announced.

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