HSBC’s tax troubles have intensified after French magistrates formally placed its Swiss private banking arm under investigation amid allegations that it helped French citizens to dodge tax.
The move comes just days after charges of tax fraud and money laundering were filed against the same unit in Belgium.
As a result of the French investigation the bank had to deposit a bail bond of €50m (£40m).
HSBC confirmed that investigating magistrates were examining “whether the bank acted appropriately between 2006-07 in relation to certain clients of the bank who had French tax reporting requirements, as well as in relation to the way the bank offered its services in the country.”
It added: “We will continue to cooperate with the French authorities to the fullest extent possible.”
The long running probe by the French magistrates, and the related investigation by their counterparts in Belgium, follows the theft of the personal details of HSBC private banking clients in Switzerland that were passed on to Belgian and French authorities in 2010.
There are fears that the case could ultimately land the bank with a US-style “mega fine” along the lines of the $1.9bn (£1.2bn) penalty imposed after watchdogs there accused its Mexican unit of acting as a conduit for sanctions busting and drug money.
The Swiss private banking operation was accused in Belgium of encouraging wealthy people to create offshore companies to allow them to conceal assets. It involves accounts held by more than 1,000 Belgians ,including wealthy clients of the Antwerp diamond trade.
Authorities in the US and in several European countries have been stepping up their efforts to pursue wealthy citizens that have used Switzerland, along with other European and offshore bolt-holes, to hide assets from the tax man.
Switzerland, with its cherished banking secrecy laws, has presented a particularly attractive target for the authorities and several Swiss banks have been forced to seek deals with the American authorities over accounts held by US citizens.
Despite the move, the bank’s shares finished the day marginally in positive territory, up 6.2p at 631.5p, in part because investors have been expecting the French and Belgian authorities to act as they have.
However, it is still damaging to the business, whose reputation continues to be battered by legacy issues even while chief executive Stuart Gulliver has been attempting to clean house.
Since his appointment he has brought an end to its habit of flag-planting, sounding a retreat from a large number of territories, particularly its more far flung operations in risky areas.
More than 60 businesses have been disposed of, including several in Latin America, a Russian retail bank and its Japanese private bank. In March the bank offloaded a portfolio of Swiss private banking assets to LGT Group of Liechstenstein.
The de-risking programme stepped up a gear in the wake of the US fine. American authorities have since praised its efforts to step up programmes designed to prevent it being used to wash dirty money, and millions of pounds have been pumped into beefing up the compliance and risk departments.
HSBC was one of the banks to share in £2.6bn in penalties over the foreign exchange trading scandal.Reuse content