German bank HSH sets aside $175 million for tax probe
FRANKFURT (Reuters) - German public sector lender HSH Nordbank HSH.UL confirmed it is setting aside 127 million euros ($175 million) to cover possible tax liabilities following an internal probe into suspected tax avoidance by clients.
The decision to set aside the provisions follows the probe by law firm Clifford Chance, which identified 29 transactions totaling around 112 million euros between 2008 and 2011 that will require closer examination, HSH Nordbank said in a statement on Tuesday.
HSH estimates that 15 million in interest would be due on that total so far, the statement said.
A source familiar with the bank told Reuters about the provisioning move on Monday.
The investigation centered on possible tax liabilities in connection with share transactions in which HSH had timed certain proprietary trades close to dividend payments and claimed possibly unwarranted tax credits related to the transactions.
Several other German banks are also looking into their involvement in the tax rebate strategy, known as "dividend stripping", where a stock is bought just before losing rights to a dividend then quickly sold.
A loophole in the law that enabled the strategy was closed in 2012 and lawyers are divided over whether the previous practice burdening state coffers was actually illegal or just objectionable.
($1 = 0.7271 euros)
(Reporting by Jonathan Gould; Editing by Louise Heavens)
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