UBS Group AG will have to pay a 1.8 billion-euro ($2 billion) penalty for helping wealthy French clients stash undeclared funds in Swiss accounts, less than half the levy that the lender had initially faced.
The Paris court of appeals on Monday upheld a 2019 ruling that the bank had illegally laundered funds by providing customers with a range of services to hide assets from tax authorities.
But the initial 4.5 billion-euro levy was reduced by more than half and includes 800 million euros in damages and a confiscation order of 1 billion euros.
While hardly a victory for UBS, it’s still a significant cut on the original penalty that stunned the Swiss bank two years ago and led to a shareholder revolt over the management’s handling of the case. The decision marks the latest step in a long running drama that outgoing Chairman Axel Weber has said was one of his priorities to address.
UBS only set aside about 450 million euros in provisions to cover the fines for the case, though it also had to post a large bond.
According to French law, UBS will be required to pay the damages granted to the state but if the lender appeals to France’s top court it should put the 3.75 million euros fine on hold.
Denis Chemla, a lawyer for UBS, said after the ruling that the fine was reduced on appeal from 3.7 billion euros to 3.75 million euros because the court considered there wasn’t “any proof” on the amounts of taxes evaded.
The fine is the maximum statutory penalty for money laundering.
“The court accepted our arguments” on that point, he said. “But they made up for it with a confiscation that wasn’t asked for; we don’t really know what that’s about. It’s a surprise. It wasn’t requested by prosecutors.’
Shares in UBS jumped as much as 3% on the ruling, reversing earlier declines.