Please try another search
© Reuters.
By Geoffrey Smith
Investing.com -- French bank stocks fell on Tuesday after police raided five institutions in connection with a six-year investigation into tax fraud in stock trading.
The banks raided were BNP Paribas (EPA:BNPP) and its brokerage arm Exane, along with Société Générale (EPA:SOGN) and Natixis. The French offices of HSBC Holdings (NYSE:HSBC) were also searched, according to a statement by the financial prosecutor's office.
Le Monde reported that 160 officials from the Finance Ministry had been involved in the searches, along with further officials from Germany.
The raids are in connection with what France calls the "CumCum" scandal, in which banks engaged in artificial stock trading to defraud the tax authorities of payments linked to dividends. Under "CumCum," investors would briefly sell stocks to non-residents at the moment they were due to pay dividends in order to avoid being taxed on them. They would then reverse the trade, splitting the tax savings between them.
The strategy was widely seen as a less risky one than the "CumEx" strategy that has been at the heart of a similar scandal in Germany. Most of the country's largest banks including Deutsche Bank (ETR:DBKGn) and Commerzbank (ETR:CBKG) have been implicated but deny wrongdoing. Various media estimates put the damage to the German government at over €35 billion (€1 = $1.0838). Dutch banks including ABN AMRO (AS:ABNd) have also acknowledged undertaking such trades.
SocGen stock was the worst affected by the news, falling 1.9% in Paris. BNP Paribas stock was down by 0.7%, ironically less than Deutsche, which fell 1.5%. Deutsche Bank has struggled to shed its image as a likely source of volatility despite massively de-risking its balance sheet since 2018. Concerns about its exposure to commercial real estate triggered a sector-wide selloff on Friday, which only partly unwound on Monday as nerves calmed.
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.