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RBS says Swiss private bank probed in Germany over tax evasion
[LONDON] Royal Bank of Scotland Group Plc, the UK's largest government-owned lender, said its Coutts private bank is being investigated by German authorities over alleged tax evasion by clients.
Current and former employees of Coutts & Co. in Switzerland are are being probed, the Edinburgh-based lender said in its annual results on Thursday. The private bank, which counts Queen Elizabeth II among its customers, is cooperating with the authority, it said.
The disclosure risks dragging the 80 per cent government-owned lender into a political storm engulfing London-based HSBC Holdings Plc over tax evasion at its Swiss unit. Chief Executive Officer Stuart Gulliver and Chairman Douglas Flint apologized to lawmakers on Wednesday after a report showed HSBC set up Swiss bank accounts for drug cartels, arms dealers and others, and advised customers on how to evade tax.
"It's a bit too early to prejudge," RBS CEO Ross McEwan, 57, said at a press conference in London when asked if the German probe was as significant as the allegations against HSBC. "Any situation like this we do take seriously. It doesn't matter how big or small, it's the reputation of our business."
RBS is seeking to sell the Zurich-based international unit of its Coutts private bank as it shifts its focus to wealthy clients in its home market. The unit could fetch US$600 million to US$900 million, a person with knowledge of the matter has said.
McEwan said RBS would provide an indemnity to any potential buyer to protect it from the probes. The lender is in the final stages of the sale and will make an announcement within the next couple of months, he said.
"The decision we made six or seven months ago to sell Coutts International didn't have anything to with what's going on now for another organization," he said. "But it does show the risks of operating away from home."