PARIS (Reuters) - An internal review by UBS’s UBSN.VX French unit into allegations that it sold products designed to evade taxes has yet to find evidence of law-breaking, the Swiss bank’s French chief told Reuters on Friday.
Putting a positive spin on UBS France’s financial health and downplaying the impact of an ongoing tax probe by the French authorities, Jean-Frederic de Leusse told Reuters the bank had shed jobs, tightened risk controls and was targeting market-share gains at its wealth-management business.
Governments across the world are cracking down on tax evasion in the wake of the financial crisis and France’s Socialist government is under pressure to act after its budget minister quit over an undeclared bank account in March.
UBS is being probed over its sales practices after a former executive told the authorities that Swiss bank accounts were being illegally sold on French soil and recorded in a separate account-keeping system used to help calculate bankers’ bonuses.
The investigation is ongoing but France’s ACP banking regulator, after mounting its own inquiry, this week fined UBS France 10 million euros ($13.00 million) - its biggest-ever fine - for dragging its heels in fixing lax risk controls.
Describing the fine as “disproportionate”, UBS’ de Leusse said the bank would likely appeal. There was no sign yet of illegal activity in transactions reviewed by UBS France, he added.
“We are fully cooperating with the authorities and we are justifying each transaction, line by line, to show that what has been done was legal,” de Leusse said on Friday in an interview at the bank’s offices near the Paris Opera House.
De Leusse, previously an investment banker at boutique firm Arjil and before then an executive at Credit Agricole (CAGR.PA), said that he had seen no evidence of impropriety so far.
“At this stage I have not identified any transaction that would be an issue,” he said.
Political pressure is mounting to catch tax cheats and punish banks that help them, with French firebrand minister Arnaud Montebourg chiding the prosecutor’s office for being too slow to act on banks and lawmaker Christian Eckert writing on his blog that the UBS fine was a “first step”.
In addition to UBS, the French prosecutor is also investigating allegations that Britain’s HSBC (HSBA.L) offered to help French clients avoid tax.
UBS’ de Leusse said that the bank had seen little impact from the tax probe on its client activity and that the French private bank’s assets under management were up 18 percent year-on-year, to 9.3 billion euros.
“We have made money since the start of the year,” the CEO said. “On our very big clients, we are pursuing a strategy where the private bank and the investment bank work in complete partnership.”
UBS France has cut around 20 jobs to follow its parent bank’s strategy of growing in wealth management while cutting back on bond trading and mergers-and-acquisitions advisory.
It is now targeting market-share gains in a country that has seen some wealthy people move elsewhere to escape higher taxes and that has trimmed small entrepreneurs’ tax breaks and other advantages.
The hope is that potential clients will seek sophisticated savings products and global investment-banking expertise.
Asked whether there were more job cuts to come, de Leusse said that for the time being there were none in the pipeline.
“Another restructuring is not on the agenda,” he said.
($1 = 0.7691 euros)
Reporting by Lionel Laurent and Matthias Blamont; Editing by Christian Plumb and Elena Berton