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BREAKING NEWS

UBS chairman defends French tax case to shareholders

UBS chairman defends French tax case to shareholders
Axel Weber, Chairman of Swiss bank UBS addresses the company's annual shareholder meeting in Basel, Switzerland May 2, 2019. REUTERS/Arnd Wiegmann -
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ARND WIEGMANN(Reuters)
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By Angelika Gruber

ZURICH (Reuters) - UBS Group had to go to court in France to fight charges that the Swiss bank helped wealthy clients dodge taxes because it was unable to strike a reasonable settlement, Chairman Axel Weber told shareholders on Thursday.

A French court in February found UBS guilty of illegally soliciting clients and laundering the proceeds of tax evasion, ordering it to pay 4.5 billion euros (£3.8 billion) in penalties. UBS denies the charges and is appealing against the ruling it has called "incomprehensible."

The case has led to a revolt by shareholders, who could withhold formal approval of the performance of the board and senior management. This would leave the leadership more exposed to potential lawsuits from shareholders.

"In the past, we were able to resolve legal cases quickly and on acceptable terms, including by reaching settlements," Weber told the bank's annual shareholder meeting. "In the case of France, unfortunately, there was no acceptable way to settle out of court. Therefore, also in the interests of our shareholders, we had no choice but to go to court."

Shareholders usually approve managements' performance for the previous financial year but unease over the French legal strategy and high pay at Switzerland's biggest bank could pose problems at Thursday's meeting.

Proxy adviser Institutional Shareholder Services last month said shareholders should not sign off on the bank leadership's performance.

Another shareholder advisory service, Ethos Foundation, recommended UBS shareholders reject all of the Swiss bank's executive and board pay proposals, including binding votes on bonuses and pay packages.

Adviser Glass Lewis has also expressed objections to UBS's pay proposal, citing "pay-for-performance concern", and recommended shareholders abstain on the discharge question.

A significant showing of shareholder opposition to the board's and management's actions would be a blow to Weber and Chief Executive Sergio Ermotti, who boosted provisions to cover the French case but still expect the verdict to be reversed.

(Writing by Michael Shields. Editing by Jane Merriman)

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