One thing you cannot accuse UBS of in the French case: poor expectations management.

By raising its litigation provision in 2023 to 1.1 billion euros, the bank set a clear marker. Back in 2019, the provision still stood at 450  million euros.

Forgiving reactions

Accordingly, reactions to Tuesday’s announcement of an 835 million euro settlement were forgiving: «Success for Ermotti — UBS pays less than feared,» cheered Swiss tabloid «Blick». And the «Financial times» nodded appreciatively: «UBS whittles 4.5bn euro French tax evasion penalty down to 835mn.»

Because everything is relative, 835 million euros looks much better when measured against the first-instance judgment of 4.5 billion euros (3.7 billion in fines, 800 million in civil damages) — but less flattering once placed next to other cases:

Even the U.S. was cheaper

In February 2009, UBS reached a settlement with the U.S. Department of Justice (DOJ) and the SEC for $780 million over assistance to U.S. clients’ tax evasion. The U.S. market was many times more important to UBS than France.

In July 2014, UBS paid 300 million euros in Germany to resolve investigations into tax evasion by German clients.

Premature settlement?

All three cases concern legacy issues from the banking-secrecy era, i.e., before the entry into force of withholding solutions and, ultimately, the Automatic Exchange of Information. In France specifically, the prosecutorial probe launched in 2014 covered activity between 2004 and 2012 and culminated in the present proceedings.

This raises the question of whether UBS entered into a settlement in France prematurely and against shareholders’ interests. In June 2017, the bank had declined to enter a settlement, called «convention judiciaire d’intérêt public», (CJIP) at 1.1 billion euros — the very type of agreement it has now accepted.

From 4.5 billion euros to 1.8 billion

At first, the decision to litigate looked costly: On February 20, 2019, the Paris Court of First Instance imposed a record fine of 3.7 billion euros and awarded 800 million euros in civil damages.

In December 2021, the Paris Court of Appeal cut the criminal fine to 3.75 million euros — a 1,000-fold reduction. However, it maintained a 1 billion euro confiscation and the 800 million euros in civil damages. (Hence the often-cited «1.8 billion» — legally not a fine, but confiscation plus civil claims.) The price tag more than halved.

A slap for the prosecutors

On November 15, 2023, the French Court of Cassation confirmed the convictions for unlawful solicitation and aggravated laundering of the proceeds of tax fraud, but quashed the 1 billion euro confiscation order and remanded that issue to the Court of Appeal — with constraints so tight that a revival was practically excluded.

In practical terms, only civil damages were still on the table; the prosecutors were on the back foot.

Civil damages as the hinge

On civil damages of 800 million euros, which must reflect actual loss, UBS itself noted back in 2019 (see PDF of its update to stakeholders at the time) that France’s supreme audit institution (Cour des comptes) had estimated the effective administrative costs related to all banks’ regularizations at just 40 million euros up to 2016 — a fraction of the 800 million euros awarded at the time.

Against that backdrop, it is hard to see why UBS in September 2025 agreed to sign for 835 million euros — made up of a 730 million euro fine and 105 million euros in civil damages. That fine level does not flow from the prior court rulings but from the particular dynamics of the negotiated settlement.

In the «best interests of all stakeholders»

What remains looks more like political face-saving than legal necessity. UBS’s communication invoked acting in the «best interests of all stakeholders». In practice, that can mean: a bit for shareholders, a bit for the French state, a bit for public image — and perhaps a bit for prosecutorial pride.

A risky precedent

It is hard to shake the impression that a few hundred million euros are treated as a rounding difference to clear a legacy issue once and for all.

For shareholders, the hope remains that France’s example will not be copied elsewhere — even the best expectations management comes with a price tag.