Probe into allegations RBS arm ‘helped tax evaders’

ROYAL Bank of Scotland’s private banking arm Coutts is being investigated over allegations that its Swiss operation helped wealthy clients evade tax.

Police guard Coutts bank in London at a past protest against the rich. Picture: Getty

The disclosure in RBS’s annual results comes at a time when rival HSBC is mired in controversy over the way its Swiss private banking subsidiary helped thousands of wealthy clients avoid tax.

RBS said the investigation by German prosecutors involved current and former staff as well as the Coutts bank itself.

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The company is looking to sell the international arm of Coutts to focus on its high net worth UK clients. Coutts manages the Queen’s private accounts.

RBS chief executive Ross McEwan said the bank would take “severe action” if any wrongdoing is found in the business.

Speaking at a press conference held to discuss RBS’s results, he said: “Any situation like this we take seriously… it is the reputation of our business. This is what has tarnished the banking industry and in my view private banks have taken far too long to catch up with the public’s 

Mr McEwan said that Coutts was co-operating with German tax authorities.

“We want to be very upfront on these issues but it is far too early to judge the outcome of those conversations as they have a process to go through,” he said.

“I want to be very clear: if we find any evidence on wrongdoing we will come down incredibly hard. It’s just not the type of behaviour we’ll have in our ­organisation.

“We take situations like this, no matter how big or small, very seriously. It’s the reputation of our business and how we’ve acted. We’ve shown this year with how we’ve dealt with a number of issues, whether they are old or new, that we will go very hard and be very open.”

The SNP’s Treasury spokesman, Stewart Hosie, expressed alarm at yesterday’s ­revelation.

He said: “These would be extremely serious allegations for any bank to be facing, but for a taxpayer-owned bank to be facing claims of helping tax avoidance is deeply alarming.

“The UK government has got to stop talking and start acting on tax avoidance – starting in its own back yard.”

Swiss private banks are under intense scrutiny in the UK following revelations that HSBC’s Swiss unit helped clients evade tax.

On Wednesday, the chairman and chief executive of HSBC apologised publicly for “unacceptable” practices at the private bank.

HSBC bosses accepted that allowing its Swiss private bank to encourage tax evasion had caused “horrible reputational damage”.

The tax-evasion issue came to the forefront when HSBC chairman Douglas Flint and its chief executive Stuart Gulliver were questioned for two hours by the Treasury select committee on the subject.

The hearing followed allegations that HSBC’s Swiss operations, which held billions of pounds for thousands of international clients, enabled wealthy individuals to evade taxes in the mid-2000s.

Mr Gulliver himself was drawn into the centre of the matter this week when it emerged that he had held an account at the Swiss bank, operated through a Panamanian company, when he worked for HSBC in Hong Kong.

Mr Gulliver, who remains domiciled in Hong Kong, said he understood that the arrangements would appear peculiar but repeated that they did not offer him any tax advantages, and were designed to stop colleagues snooping on his ­finances.

Last year RBS appointed Goldman Sachs to find a buyer for Coutts’ international operations, as part of its drive to focus on the UK business.

Coutts International employs 1,200 people, has some £21.5 billion of assets under management and has an estimated value of up £800 million .

A buyer would have to find a new name for the international operation as RBS intends to keep the Coutts brand for the UK business.

Last night RBS sources said that, since 2010, its international private banking business has transformed the policies and controls that it uses to prevent its services being used by clients to evade taxes, claiming that Coutts was now committed to the highest standards of transparency in the exchange of information with tax authorities.

An RBS spokesman said: “A prosecuting authority in Germany is undertaking an investigation into Coutts & Co Ltd in Switzerland, and current and former employees, for alleged aiding and abetting of tax evasion by certain Coutts & Co Ltd clients. Coutts & Co Ltd is co-operating with the authority.”