UBS has been ordered to pay €4.5bn (£3.9bn) by a French court for helping wealthy clients dodge tax, adding to a raft of violations that stand to leave the Swiss bank almost £8bn out of pocket.
The lender was found guilty on Wednesday of illegal solicitation and laundering proceeds of tax fraud, a ruling which came with a €3.7bn fine and €800m in civil damages. The total penalty is said to be a record for France, and outstrips UBS’ full-year net profit of $4.9bn (£3.7bn) for 2018.
UBS has denied any wrongdoing and has pledged to appeal the French court’s judgment.
The ruling is the latest violation to be laid on UBS’s doorstep, having already accrued $5bn in penalties in the US alone since 2000, according to figures compiled by corporate misconduct search engine Violation Tracker.
Adding Wednesday’s ruling to the list, it would mean UBS could be at least £7.7bn out of pocket due to a raft of settlements and fines over past two decades. However, a formal appeal by UBS will pause any immediate payout over the French case.
In 2009, UBS shelled out $780m as part of a deferred prosecution agreement with the US Department of Justice, having admitted to helping US clients hid their accounts from the taxman.
Unsealed court documents claimed that bank employees helped US taxpayers open new UBS accounts in the names of nominees or sham entities, to assist them in tax evasion.
In 2012, the bank agreed to pay $1.5bn to US, UK, and Swiss regulators in relation to interest rate manipulation, which at the time was one of the largest fines ever imposed on a bank.
Smaller fines have also been levied on the bank over issues including supervision failures and breaching US economic sanctions.
UBS is still facing a lawsuit by the US Department of Justice over the sale of residential mortgage-backed securities in 2006 and 2007.
The suit, which was announced in November, came after a $230m settlement that UBS reached with the state of New York in March, following a probe into the bank’s packaging and sale of the financial products. It followed an $885m settlement in 2013 with the US federal housing finance agency over similar allegations.
Commenting on Wednesday’s court ruling, the bank said in a statement: “UBS strongly disagrees with the verdict. The bank has consistently contested any criminal wrongdoing in this case throughout the investigation and during the trial.”
It claimed that the conviction was “not supported by any concrete evidence, but instead is based on the unfounded allegations of former employees who were not even heard at the trial”.
The lender also took issue with the cross-border ruling. “No evidence was provided that any French client was solicited on French soil by a UBS AG client adviser to open an account in Switzerland. As no offence in France was established, the decision effectively applies French law in Switzerland.
“This undermines the sovereignty of Swiss law and poses significant questions of territoriality.” It added: “UBS will appeal the verdict and evaluate whether the written decision requires any additional steps.”
