London: HSBC Holdings Plc must pay 1 billion euros ($1.1 billion) in bail as part of French criminal investigations linked to a tax-evasion probe at its private bank.
HSBC on Wednesday was informed it was placed under formal criminal investigation regarding its private bank’s conduct in 2006 and 2007. The move came five months after HSBC’s Swiss unit was charged and ordered to post a 50 million-euro bail.
The decision is “without legal basis and the bail is unwarranted and excessive,” London-based HSBC said in a statement on Thursday. It will appeal the decision.
French President Francois Hollande has increased efforts to punish tax evasion since his former Budget Minister Jerome Cahuzac was forced to resign after his secret Swiss account was exposed. The government has targeted wealthy individuals who stashed assets over the border in Switzerland and Luxembourg and advised the banks they used to encourage clients to declare their untaxed assets.
HSBC shares rose 2.3 per cent at 2:02pm in London, paring losses this year to about 1.4 per cent.
UBS AG was forced to pay a 1.1 billion-euro security deposit last year to cover potential penalties in a separate French tax-evasion probe after its appeals failed.
French investigators have recommended the Swiss unit stand trial in the matter, and a final decision is pending.
France began scrutinising HSBC’s Swiss private bank after Herve Falciani, a former information technology worker at the firm, stole client account details from HSBC’s Geneva office in 2008 and passed them to the government.
That information received renewed public scrutiny around the world this year, when a report by the International Consortium of Investigative Journalists revealed for the first time the massive sweep of HSBC’s private-banking arm as of 2007, when it controlled $100 billion in assets and served a swath of wealthy depositors from the elite to the illicit.