- U.K. lender reaches settlement with German authorities
- Swiss Coutts bank alleged to have aided some clients evade tax
Royal Bank of Scotland Group Plc agreed to pay 23.8 million euros ($26 million) to settle allegations from German prosecutors that its Swiss Coutts & Co. Ltd. private bank helped some clients evade tax.
The Edinburgh-based lender said in February its Swiss unit, as well as current and former employees, were being investigated for alleged aiding and abetting of tax evasion. The bank has now “reached a settlement with the German authorities to resolve this matter,” a spokeswoman said by e-mail on Wednesday.
RBS agreed to sell the international business of Coutts to Switzerland’s Union Bancaire Privee in March as the Edinburgh-based lender retreats from global operations to focus on consumer and commercial banking in the U.K. and Ireland. It provided an indemnity to protect UBP from the German probe and kept the British part of the private bank, which includes Queen Elizabeth II among clients.
The amount of the settlement, reported earlier by German newswire AWP, was levied by a Dusseldorf court and was set in proportion to the undeclared assets of German customers the bank handled, prosecutor spokesman Ralf Moellmann said by e-mail. A probe made into payments by unidentified bank managers and employees was dropped.
The disclosure of the German probe earlier this year moved RBS closer to a political firestorm over allegations of tax evasion in Switzerland by HSBC Holdings Plc. Chief Executive Officer Stuart Gulliver and Chairman Douglas Flint apologized to lawmakers after a report showed the London-based lender set up Swiss bank accounts for drug cartels, arms dealers and others, and advised customers on how to evade tax.
The revelations were brought to light by Herve Falciani, a former bank employee who took client data from HSBC’s Geneva unit. He was found guilty of corporate espionage and given a five-year prison sentence by a Swiss court in absentia last month.
RBS is preparing to cut costs at its Coutts private bank in the U.K. in the first half of next year, a person with knowledge of the matter said this week.