UBS Appeals $2 Billion Tax Penalty at French Supreme Court
UBS Appeals $2 Billion Tax Penalty at French Supreme Court
(Bloomberg) -- UBS Group AG appealed a court verdict that it helped wealthy French clients stash undeclared funds in Swiss accounts, prolonging a period of legal uncertainty in the seven-year old case.
The Zurich-based bank filed an appeal with the French Supreme Court regarding the ruling, according to a statement late Monday. It had five days from the judgement last week to make the decision.
A French appeal court last week ordered the bank to pay 1.8 billion euros ($2 billion) in penalties after it upheld a 2019 finding that UBS illegally laundered funds by providing customers with services to hide assets from tax authorities. While the amount was cut by more than half from the earlier ruling, Bloomberg reported that UBS was reluctant to accept a guilty decision that could compromise business in other jurisdictions and was also leaning toward challenging the financial penalties.
The decision to challenge the verdict at France’s top court “enables UBS AG to thoroughly assess the verdict of the Court of Appeal and to determine next steps in the best interest of its stakeholders,” it said.
UBS shares rose 0.9% at 9:10 a.m. in Zurich trading on Tuesday, bringing this year’s gains to 28%.
Before last week’s ruling, the bank had faced penalties of about 4.5 billion euros. That amount had stunned the Swiss bank and even led to a shareholder revolt over the management’s handling of events. Since then, Ralph Hamers replaced Sergio Ermotti as chief executive officer and Chairman Axel Weber is set to be replaced by former Morgan Stanley top banker Colm Kelleher.
UBS decided in early discussions with French authorities in 2014 not to settle because it didn’t want to admit guilt, and has been fighting in the courts since. Weber has said the French tax case was one of his priorities to address, with uncertainty over the outcome weighing on the bank’s ability to boost shareholder returns.
Overall, the UBS matter relates to the years 2004 to 2012. The Swiss bank contested that it engaged in any criminal wrongdoing in the case. It only set aside about 450 million euros in provisions to cover its costs, and it also had to post a 1.1 billion-euro bond.
The main penalty in the latest ruling breaks down as 800 million-euro damages award for the French state and a confiscation order of 1 billion euros. The fines imposed on UBS and its French unit would be suspended if the decision is appealed, the lender said last week.
Expectations that UBS would win a reduction on appeal peaked during the trial hearings after prosecutors conceded that recent guidance from France’s top court forced them to seek a lower fine.
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