UBS AG (UBSN)’s French unit has boosted revenue by 10 percent in the first half as it returns to profit, and is cooperating with legal authorities who penalized the bank for failing to prevent tax fraud, according to its top executive.
The French unit of Switzerland’s largest bank, which was fined 10 million euros ($13 million) for deficient controls yesterday, has more than 9 billion euros under management from wealthy clients, up from about 8 billion euros a year ago, Jean-Frederic de Leusse, UBS France’s chief executive officer, said in an interview in Paris. Asked about the fine, he said he understands “neither the scope nor some of the reasoning behind this decision.”
“We are cooperating in full transparency with the judges,” said de Leusse, a former senior executive at Credit Agricole SA (ACA) who became the head of UBS France last year. “It’s in the bank’s interests to clarify this situation as fast as possible.”
De Leusse said French clients opening accounts at UBS in Switzerland since the middle of 2012 have been required to prove they’re compliant with their nation’s tax laws, and longer-standing clients have been requested to provide such proof since the start of this year.
UBS France was at “the threshold of profitability” in 2010 before the sovereign-debt crisis “had an impact on our assets under management and our performance” over the next two years, de Leusse said. “Today we are profitable. Our performance has been good” in 2013, he said.
French regulators said yesterday that in late 2007, UBS France was alerted to “serious suspicions” that bank personnel may have been involved in illicit marketing and covering up tax fraud, and the bank waited more than 18 months before setting up the controls required to monitor and suppress such activities.
UBS, which is based in Zurich, said it may appeal the decision yesterday and disagrees with “many” of the regulator’s conclusions. “UBS does not tolerate any activities intended to help its clients circumvent their tax obligations,” the bank said in a statement.
UBS and its French unit are under a formal investigation by Paris prosecutors as France steps up efforts to combat tax evasion. French tax investigators searched UBS offices in cities including Strasbourg, Lyon and Paris last year, and three individuals were put under formal investigation.
In France, UBS has about 60 wealth-management bankers advising clients and also operates in investment banking and asset management.
De Leusse said that as part of UBS’s overhaul of investment banking, the French unit cut 25 jobs this year, with staff reductions mostly in fixed income and mergers and acquisitions.