HSBC has agreed to pay 267.5 million euros ($312.33 million) to the French treasury to settle an investigation into alleged dividend tax payment fraud. The French financial prosecutor’s office initiated the investigation into the international bank as part of a broader probe involving multiple banks. Similar investigations have also been conducted in Germany and other European countries. HSBC is a global banking and financial services company, serving millions of customers through its global businesses. The bank provides a wide range of financial services, including retail banking, commercial banking, and wealth management.
The settlement, approved by a Paris court, concludes a probe into practices occurring between 2014 and 2019. The investigation focused on intra-group dividend arbitrage transactions, with the prosecutor alleging these schemes could constitute tax fraud. However, HSBC stated the settlement is not an admission of guilt and declined to comment on whether provisions had been made for the settlement or its potential impact on financial results.
HSBC, in a statement, expressed satisfaction in resolving the matter, which it says relates to historical trading that concluded in 2019. The bank stated that the settlement acknowledges its cooperation with the investigation and the corrective measures implemented to address the past issues. The broader investigation, of which this case was a part, centres around dividend stripping trades known as “cum-cum” and “cum-ex” schemes, involving the rapid trading of company shares around dividend payout dates. These schemes are designed to obscure stock ownership, potentially enabling multiple parties to illegitimately claim tax rebates on dividends.
