German bank HVB says it did "cum-ex" tax trades until 2008

FRANKFURT, July 31 Thu Jul 31, 2014 2:34pm EDT

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FRANKFURT, July 31 (Reuters) - HypoVereinsbank, the German arm of Italy's UniCredit, said on Thursday that an internal probe concluded that the bank had conducted "cum-ex" transactions, also known as dividend stripping, that had helped clients avoid taxes.

The bank said it sought more information from former management board members and that it had the right to assert claims against certain individuals. No current management board member was affected, the bank said in a statement.

"The results of the investigation suggest misconduct of individuals in the past," the bank said.

"The supervisory board will now request from certain former management board members a response on the respective findings of the investigations," the bank said, adding that it had informed tax and regulatory authorities.

A spokeswoman declined to elaborate.

The transactions took place between 2005 and 2008, the bank said. None of the tax rebate strategies, which helped clients avoid paying taxes on dividends, have been conducted since 2009, the bank said.

A loophole in the law that enabled the strategy was closed in 2012 and lawyers are divided over whether the previous practice was actually illegal or just objectionable.

HVB has set aside around 200 million euros in recent years in provisions to cover possible liabilities stemming from possible liabilities. No further provisions beyond that amount are expected, said a person familiar with the matter.

Other German banks have also been caught up in dividend stripping probes, with public sector lender HSH Nordbank saying last year it had set aside 127 million euros to cover possible tax liabilities. (Reporting by Thomas Atkins; Editing by Susan Fenton)

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