UBS Said to Face Fine of About EU4.9 Billion in French Tax Case

Oct. 3 (Bloomberg) — UBS AG, Switzerland’s biggest bank, may face a fine of about 4.9 billion euros ($6.2 billion) in a French probe of allegations it helped clients evade taxes, according to a person with knowledge of the case.

The Zurich-based bank earlier this week paid a 1.1 billion- euro bail against potential penalties in the case, a person said Sept. 30, after losing an appeal against the bond request. The bail ruling reiterated judges’ July estimate that UBS’s undeclared offshore funds from French taxpayers total about 9.8 billion euros, with a potential penalty of half that amount, said the person, who asked not to be identified because the information is private.

“The base for any calculations in this matter are completely artificial, speculative and not based on facts,” UBS said in an e-mailed statement today. “This matter is currently still in the stage of a formal investigation and we will continue to defend ourselves strongly.”

UBS dropped as much as 3.2 percent, the most since May, and was 1.2 percent lower as of 1:10 p.m. in Zurich trading. Swiss newspaper Le Temps reported the potential fine earlier today.

French President Francois Hollande stepped up efforts to fight tax dodgers after a former budget minister was forced to resign when his Swiss secret account was exposed. Finance Minister Michel Sapin toughened the stance against fiscal evasion with a Franco-Swiss tax accord in June.

‘Major Concern’

UBS called the disclosure of the confidential document written by the two judges “irresponsible” in today’s statement. It cannot control the “selective interpretation” of those same documents, the bank said.

A fine of $6.2 billion compares with UBS’s net income of 3.2 billion Swiss francs ($3.3 billion) in 2013. UBS may post net income of 3.5 billion francs this year, according to the average estimate of 19 analysts surveyed by Bloomberg.

“It’s a major concern if that is the scale of the number,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA. “If true, this would be another major blow to the whole capital distribution story.”

–With assistance from Jeffrey Vögeli in Zurich.

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at [e-mail] To contact the editors responsible for this story: Elisa Martinuzzi at [e-mail] Cindy Roberts