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Sept. 8 (Bloomberg) -- UBS AG asked a Paris appeals court to overturn a 1.1 billion-euro ($1.4 billion) bail that has loomed over the Swiss bank since France stepped up its two-year- old tax evasion probe.

The hearing dragged on for nearly three hours as the parties argued the case. The court said it would decide on the appeal on Sept. 22, UBS lawyer Denis Chemla said after the closed-door proceedings.

Judges set the security guarantee in July after placing the Swiss bank under formal investigation on suspicion of laundering proceeds from the alleged tax evasion.

The bank, Switzerland’s biggest, has been embroiled in tax evasion probes in Europe since it paid $780 million in 2009 to resolve accusations that it helped tens of thousands of U.S. clients hide taxable income.

In Zurich, Serge Steiner, a UBS spokesman, declined to comment on the hearing today.

UBS has denounced the French action as “unprecedented and unwarranted” and disputed both the legal basis for the bail and the method of calculation. The money, to be applied against any eventual penalties and damages, must be paid by the end of September.

The bail represents more than 70 percent of UBS’s net income for the first half of this year. France is among few countries that levy security deposits from corporations in criminal cases.

The bail “makes no sense,” UBS CEO Sergio Ermotti said in a July 29 interview with Bloomberg Television. UBS was in “advanced discussions” with French authorities about “double- digit million settlements, he said.

Dominique Gerster, a spokesman for UBS, has said the negotiations stalled after the U.S. fined BNP Paribas SA, France’s largest bank, almost $9 billion in June for violating economic sanctions against countries including Sudan and Iran.

The French tax service, part of the country’s finance ministry, is a plaintiff against UBS. The ministry did not respond to requests for comments and a spokesman for the lead prosecutor could not be reached for comment.

The penalty against BNP came a month after U.S. tax prosecutors extracted a guilty plea and a promise to pay $2.6 billion from the main subsidiary of Switzerland’s other big bank, Credit Suisse Group AG.

France first brought criminal charges against UBS in mid-2013, accusing the head office and its French unit of illegally soliciting clients in France. Prosecutors say the practices were part of a concerted effort carried out over eight years from 2004 to 2012.

UBS said in July that it paid about 300 million euros to authorities in the German state of North Rhine-Westphalia to settle an investigation into whether it helped German clients hide taxable income.

UBS is also under investigation in Belgium on suspicion of money laundering and organized crime. Authorities searched the offices of UBS (Luxembourg) S.A.’s Belgium branch in June.

To contact the reporters on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net; Jeffrey Vögeli in Zurich at jvogeli@bloomberg.net To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net Cindy Roberts

Bloomberg