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Paris(Reuters) French authorities searched the Paris offices of five banks Tuesday, including Societe Generale, BNP Paribas and HSBC, on suspicion of fiscal fraud. The search was part of a broad European probe into the dodging of tax payments on dividends.
Societe Generale (SCGLF) confirmed the searches, declining further comment. BNP Paribas and HSBC did not immediately respond to a request for comment.
The French prosecutors’ actions are the latest to hit global banks over the dividend tax fraud scheme. Similar investigations have been conducted in Germany and other European countries.
France’s financial prosecution office, the PNF, said in a statement that the probe was linked to so-called “cum-ex” dividend stripping, a trading scheme whereby banks and investors swiftly trade shares of companies around their dividend payout day.
The practice aims to blur stock ownership and allow multiple parties to illegally claim tax rebates on dividends.
The PNF, confirming an earlier report in newspaper Le Monde, said Tuesday’s searches had also targeted Exane, which is part of BNP Paribas (BNPQF), and Natixis, the investment bank arm of French banking group BPCE.
A spokesperson for the French financial prosecution office said it was impossible to put an exact figure on the scale of the fraud but said the banks collectively faced a total compensation request of more than $1 billion, including fines and late interest payments.
The oldest case under investigation dated back to 2014, and it was not possible to say when the practice had ended.
“The ongoing operations, which have required several months of preparation, are being carried out by 16 investigating judges and over 150 investigation agents,” the PNF said in its statement. It added that six German prosecutors were also assisting with the investigations.
The searches come as the global banking sector is in turmoil following this month’s collapse of Silicon Valley Bank and Signature Bank in the United States, and the government-orchestrated takeover of Credit Suisse by rival UBS.
Shares of Societe Generale closed more than 1% lower Tuesday. Stock in BNP Paribas rose 0.4%, while HSBC’s stock was flat.
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