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July 29, 2014 9:24 pm
UBS said that it paid €300m to settle an investigation by authorities in Bochum into whether it helped German clients evade taxes, as it revealed better-than-expected second-quarter results.
The Swiss bank said that the settlement was “a significant step allowing UBS to move forward in this important market”, adding that 95 per cent of its German clients were now tax compliant. It aims to have all of them compliant by the end of the year.
The investigation by the Bochum authorities is one of a number of probes into UBS’s cross-border wealth management business and UBS now has SFr510m set aside in provisions to cover litigation risks emerging from the division.
UBS’s offices in Belgium were searched by local authorities in June, and the bank is also being investigated in France, where a court last week demanded it post €1.1bn bail after the bank was placed under formal examination for alleged laundering of the proceeds of tax fraud.
The Swiss group said that it would appeal against the “unprecedented and unwarranted” bail demand, and accused the French authorities of politicising the case, adding that it would “continue to defend our case strongly”.
UBS revealed the German settlement as it reported a net profit of SFr792m (€652m) – or SFr0.21 per share – in the second quarter, up from SFr690m a year ago.
UBS’s non-American wealth management division reported a pre-tax operating profit of SFr355m, down 36 per cent on the same period a year earlier, mainly due to litigation charges. Profits at UBS’s Americas wealth management unit were more or less flat at $238m.
Meanwhile, profits in UBS’s investment banking division came in at SFr579m, down 25 per cent from the same period a year earlier, but better than analysts had forecast.
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