UBS Wins Right to Fight for Cut to €1.8 Billion French Fine
(Bloomberg) — UBS Group AG won a French top court ruling that may help it cut a €1.8 billion ($2 billion) penalty it got two years ago for helping wealthy French clients stash away undeclared funds in Swiss accounts, extending a decade-long spat yet further.
The judges upheld a lower court’s money laundering conviction against UBS but said the overall penalty should be reexamined. The judges called into question the validity of a €1 billion confiscation order and the justification for €800 million in reparation awarded to the French state.
The Cour de Cassation asked a different panel of judges at the Paris appeals court to issue a new ruling on the overall amounts based on Wednesday’s legal guidance. That also reopens the debate on a third part of the penalty, leaving the possibility that the actual criminal fine set at €3.75 million can be increased.
The legal saga in France has rumbled on for more than a decade with UBS fighting on to cut the €4.5 billion penalty it initially got in 2019. The case has also featured twice-failed settlement talks, a banking boss calling his staffers “egomaniacs,” a whistle blower spying on former colleagues during tennis matches and investigators accusing the bank of deploying stealth tactics “worthy of James Bond.”
“UBS continues to maintain that it acted in accordance with all applicable laws and regulations at all times,” the company said in a statement. “UBS will defend itself in the forthcoming trial.”
Read more: UBS’s Record French Tax Fraud Penalty Slashed to $2 Billion
UBS shares jumped after the ruling and were up 2% by 4:28 p.m. in Zurich.
Morningstar analyst Johann Scholtz said the ruling was “a positive” for UBS, adding he didn’t see “much merit” in the initial French decisions.
On Wednesday, the top court also confirmed a prior finding that UBS covertly and unlawfully dispatched Swiss bankers in France to encourage prospective clients to move money across the border.
Throughout the French trials, UBS deployed a vast team of high-powered attorneys, executives and communications staff to deny the bank ever helped French citizens hide funds and hammer on the weaknesses in the case.
The bank relentlessly questioned the truthfulness of bankers-turned-witnesses, saying one “lied” and accusing another of stealing €750,000 from clients. But it’s the Swiss bank’s arguments on the amount of the overall penalty that have held the most sway with judges in France.
Read More: UBS Inherits Legacy of Legal Headaches From Credit Suisse
In the meantime, UBS acquired local rival Credit Suisse in a rescue that closed in June. The deal has set the bank on one of the most complex integrations since the financial crisis, which includes efforts to keep key talent in certain areas while shedding other aspects of the business.
UBS has also been winding down its backlog of unresolved cases this year, including a $1.4 billion settlement over US mortgage-backed securities. Switzerland’s biggest bank also reached a settlement with Mozambique over Credit Suisse’s role in a ship-financing scandal.
–With assistance from Alan Katz and Steven Arons.
(Updates throughout)
©2023 Bloomberg L.P.
