ZURICH: Leading Swiss bank UBS turned in a strong profit performance in the second quarter, but highlighted the stark risks financial institutions face from campaigns by tax and regulatory bodies.
UBS, reporting a 15-percent net profit rise, revealed that in July it had settled a tax dispute in the German state of North Rhine-Westphalia with a payment of slightly more than €300m.
The payment follows investigations of UBS clients suspected of using the bank to evade taxes. The bank is also being investigated in the German region of Baden-Wurtenberg.
German authorities acted at the end of 2012 after buying a CD disc containing account details stolen in Switzerland in a move which caused tension between the two countries.
This came as many governments hit by the financial crisis were clamping down on cross-border tax evasion.
Large parts of the Swiss banking industry is having to adapt to a new environment of reduced banking secrecy.
Germany is an important market for UBS, which said that more than 95 percent of its German customers had provided proof either that their taxes were in order or that they were coming clean to the authorities.
UBS said that it had made a provision of 120m Swiss francs ($133m) for the dispute in Germany and overall had put aside 254m Swiss francs for litigation and disputes.
Last week, UBS was put under investigation in Paris on allegations of laundering money from tax evasion and was ordered to post bail of €1.1bn. The bank said then that the case was politically motivated and that it would appeal against the size of the bail.
The bank highlighted the risks to banks over such tax and other regulatory cases, referring to “enforcement matters”.
AFP
