UBS Group’s two biggest legal cases in years are hitting the final stretch in a test of chief executive Sergio Ermotti’s strategy of taking on French and US authorities.
Switzerland’s largest lender was hit with a long-expected fraud lawsuit by the US that accused it of fuelling the 2008 financial crisis by deceiving investors who bought tens of billions of dollars of risky mortgage-backed securities.
The French state and prosecutors are asking for as much as 5.3 billion euros ($6bn) in fines and damages over allegations it helped clients hide money from authorities.
UBS’s hard bargaining has resulted in both cases going to court, often a last resort for banks, with the worst-case scenario being huge fines and lengthy legal battles. The cases are among a series of such obstacles Zurich-based UBS has faced since the start of the financial crisis a decade ago, including a $1.5bn fine in 2012 for rigging the Libor benchmark.
Tax-related investigations have also cut into the bank’s reserves: it paid $780 million in the US nearly a decade ago and about 300 million euros in Germany in 2014.
UBS stocks declined by as much as 3.1 per cent in Zurich and were trading 2.9 per cent lower at 14.08 francs as of 9.17am Swiss time.
“The French are demanding a lot - probably ten times more than what I estimate UBS has provisioned,” Daniel Regli, an analyst at MainFirst in Zurich said. “At a maximum, half of that amount would be realistic. The Swiss bank “has gone the route of fighting cases, most have come to agreements with authorities. Time will tell if this more aggressive approach works out.”
It is an approach that worked for British bank Barclays. It fought back against the Department of Justice in a similar case two years ago, when negotiations broke down over the size of the penalty involved. Federal prosecutors in Brooklyn filed a civil complaint against the bank, but ultimately settled the case earlier this year for $2bn, less than half of what US authorities had originally demanded.
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The UBS case in France ended up in court after settlement talks between the bank and authorities broke down in March 2017 over the size of the fine. UBS had been pushing to settle the French investigation for less than the 300 million euros it paid to resolve a similar case in Germany.
Prosecutors in France asked the court to impose a record fine of 3.7 billion euros that would be commensurate with UBS’s size, the nature of the crime and the damage to society. The French state, which is a plaintiff in the Paris trial, is seeking 1.6 billion euros from the bank in addition to any court-imposed penalties.
“The underlying facts are of an exceptional breadth and a systematic nature,” Prosecutor Serge Roques said Thursday during his closing arguments at the month-old trial.
UBS called the prosecution’s fine calculation “irrational” and said the trial was ordered by lead French investigators on the basis of “erroneous conclusions.”
Before the court case started, UBS had to post 1.1 billion euros in bail. The bank had denied all the allegations.
Roques argued that the fine should be based on 2015 evidence from French investigators that found almost 4,000 French residents with Swiss UBS accounts made late tax payments on assets worth around 3.8 billion euros.
UBS said the calculation was the result of “a simplistic approach taking into account the full amount regularized by French taxpayers without any proof of an underlying offense.”
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UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Winners
Best Men's Player of the Year: Kylian Mbappe (PSG)
Maradona Award for Best Goal Scorer of the Year: Robert Lewandowski (Bayern Munich)
TikTok Fans’ Player of the Year: Robert Lewandowski
Top Goal Scorer of All Time: Cristiano Ronaldo (Manchester United)
Best Women's Player of the Year: Alexia Putellas (Barcelona)
Best Men's Club of the Year: Chelsea
Best Women's Club of the Year: Barcelona
Best Defender of the Year: Leonardo Bonucci (Juventus/Italy)
Best Goalkeeper of the Year: Gianluigi Donnarumma (PSG/Italy)
Best Coach of the Year: Roberto Mancini (Italy)
Best National Team of the Year: Italy
Best Agent of the Year: Federico Pastorello
Best Sporting Director of the Year: Txiki Begiristain (Manchester City)
Player Career Award: Ronaldinho
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The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
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The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
MWTC
Tickets start from Dh100 for adults and are now on sale at www.ticketmaster.ae and Virgin Megastores across the UAE. Three-day and travel packages are also available at 20 per cent discount.