(Bloomberg) — UBS Group AG got a boost after judges ordered the lender to pay a heavily reduced 1.8 billion-euro ($2 billion) penalty for helping wealthy French clients to stash undeclared funds in Swiss accounts.
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.
According to French law, UBS will be required to pay the damages granted to the state but appealing to France’s top court should put the 3.75 million euros fine on hold.
Shares in UBS jumped as much as 3% on the ruling, reversing earlier declines.
Expectations that UBS would win a reduction on appeal peaked during the trial hearings after prosecutors conceded that recent guidance from France’s top court forced them to seek a lower fine, bringing the total penalty and damages sought to 3 billion euros.
Monday’s outcome is a setback for prosecutors at the Parquet National Financier who brought the case and may make other companies think twice before seeking to settle investigations.
In the UBS case, the Swiss lender eschewed a settlement in 2017 after failing to agree on an amount, exposing it to in-court demands from the state and prosecutors.
At the time, UBS started by offering 180 million euros, less than a fifth of the 1.1 billion-euro bond it had to post in the case. As French enforcers dismissed the UBS offer, which it had improved slightly, as unacceptable, the bank’s legal team decided to play hardball, pushing the case to trial in the hope of wringing out a smaller penalty.
(Updates throughout. An earlier version of this story corrected the amount in the head)
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