French court slashes UBS tax evasion fine to 1.8 bln euros

A Paris appeals court on Monday slashed the penalty UBS (UBSG.S) must pay for allegedly helping wealthy clients in France evade taxes to 1.8 billion euros ($2.03 billion), but upheld that the Swiss bank was guilty of both promoting illegal banking services and money laundering.

The revised penalty is less than half an overall fine of 4.5 billion euros imposed against the bank after a first trial in 2019 and shares in UBS rose more than 2 per cent after Monday’s verdict.

The bank, however, had hoped to see the charges thrown out by the appeals court, particularly the money laundering allegation because of the potential reputational damage.

It said it would decide quickly on whether to lodge an appeal against the ruling with France’s Supreme Court.

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

“Compared to the first instance ruling, 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.”

Fines in Europe for tax-related and other offences have historically been lower than in the United States, with the UBS case marking an exception that has been closely watched by other banks.

Confirming the verdict of the 2019 trial, the appeals court found UBS guilty of soliciting clients illegally at sporting events and parties in France, and of laundering the proceeds of tax evasion.

UBS had said in its third-quarter financial statement that investigating judges had ordered it to provide bail of 1.1 billion euros in connection with the case. The bank has also set aside 450 million euros in provisions.

Lawyers for the bank had argued in the appeals trial that despite whistleblowers coming forward, investigators had never found clear evidence of systematic attempts by UBS sales consultants to canvass French customers, including at client events like cocktail parties and hunts.

The bank had also argued that the original fine was disproportionate.