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Sept. 22 (Bloomberg) -- UBS AG, Switzerland’s biggest bank, must provide a 1.1 billion-euro ($1.4 billion) security deposit required by French investigators after an appeal was denied.

A Paris appeals court today upheld the bond request, made in July to cover a potential criminal penalty for alleged money laundering, said a court official. UBS officials didn’t immediately return calls seeking comment.

French President Francois Hollande has increased efforts to crack down on tax fraud since his former budget minister, Jerome Cahuzac, was forced to resign after his secret Swiss account was exposed. In a July statement, UBS denounced the French demand for a security deposit as “unprecedented and unwarranted,” and said the process had become “highly politicized.”

Investigative judges in Paris, led by Guillaume Daieff, demanded the deposit after settlement talks broke down in July when UBS balked at pleading guilty, two people familiar with the events said last week. The French legal system only allows settlements in conjunction with a guilty plea, an admission UBS was concerned might hamper its business in the U.S., said the people, who asked not to be identified because the circumstances are private. France added to the charges at that time, putting UBS under formal investigation for laundering the proceeds of tax fraud.

Chief Executive Officer Sergio Ermotti said in a Bloomberg Television interview on July 29 that the bail “makes no sense,” adding UBS had been in talks for a “double-digit million” settlement.

To contact the reporters on this story: Jeffrey Vögeli in Zurich at jvogeli@bloomberg.net; Gregory Viscusi in Paris at gviscusi@bloomberg.net To contact the editors responsible for this story: Heather Smith at hsmith26@bloomberg.net; Elisa Martinuzzi at emartinuzzi@bloomberg.net Frank Connelly

Bloomberg