Credit Agricole Settles Dividend Tax-Evasion Probe with €88 Million Deal

Credit Agricole's investment banking arm has agreed to pay €88.2 million to settle a criminal investigation in France over alleged misuse of dividend-arbitrage trades to sidestep withholding taxes. This agreement was approved by Judge Peimane Ghaleh Marzban during a public hearing, enabling Credit Agricole Corporate and Investment Bank (CACIB) to conclude the case without admitting guilt.

The investigation scrutinized cum-cum trades that allowed banks to hold shares temporarily for foreign clients around dividend payout dates. This practice enabled investors to reclaim or avoid French dividend taxes. CACIB emphasized that the settlement does not admit any criminal wrongdoing nor suggest CACIB promoted such tax evasion tactics.

Prosecutors reviewed transactions from 2013 to 2021, revealing that about 2,500 deals generated €50 million in profit for the bank. While CACIB was accused of facilitating tax avoidance trades, it did not run aggressive promotions for them. The bank admitted the facts of the case, cooperated during a two-year investigation, and resolved related tax issues. In France, companies facing financial misconduct can avoid trial through judicial settlements with fines and compliance assurances while avoiding criminal convictions.

(With inputs from agencies.)