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September 22, 2014 at 10:49 AM
UBS AG, Switzerland’s biggest bank, must pay a 1.1 billion-euro ($1.4 billion) security deposit required by French investigators, a Paris court ruled.
The appeals court today upheld the bond request, made in July to cover a potential criminal penalty for alleged money laundering, a court official said. Under the original order, the payment was due by the end of this month. A further appeal would push back the deadline, the same official said.
“UBS is very disappointed at the decision,” the Zurich- based bank said in an e-mailed statement, adding it will appeal the ruling. It will also fight the underlying investigation, it said.
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. UBS, in its statement, denounced the investigation as a “highly politicized process” that hasn’t followed “elementary facets of the rule of law.”
The French bail order “shows a certain distrust toward the bank,” said Dieter Hein, a banking analyst at Fairesearch GmbH in Kronberg, Germany. “This seems to be a political statement; they want to send a message.”
UBS shares fell 1.5% to 16.37 Swiss francs in Zurich, bringing the decline this year to 3.3%.
No Sense
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., according to the people, who asked not to be identified because the circumstances are private.
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.
