Credit Agricole close to settling French dividend tax case with fine, source says

By Mathieu Rosemain

PARIS (Reuters) -Credit Agricole SA’s investment banking arm is close to settling a criminal probe into dividend-arbitrage trades allegedly used to avoid withholding taxes, a source close to the matter said, confirming an earlier report by France Info.

France’s financial prosecutor (PNF) will present a proposed fine to a Paris judge on Monday, who will decide whether to approve the settlement, the person said, asking not to be identified as the matter is not public.

A spokesperson for the prosecutor's office confirmed a hearing to review a proposed settlement with Credit Agricole Corporate & Investment Bank (CACIB) will take place on Monday, without saying whether it relates to so‑called “cum‑cum” transactions.

In France, companies accused of financial misconduct such as corruption or tax fraud can settle with prosecutors to avoid trial. 

The agreement typically involves paying a fine and committing to compliance measures, without admitting guilt or receiving a criminal conviction, as long as the deal is approved by a judge.

French investigators raided the offices of BNP Paribas , HSBC’s local unit, Societe Generale and BPCE's Natixis in 2023 as part of their crackdown on cum-cum trades.

These trades typically involve foreign investors temporarily transferring shares in French companies to local tax-exempt entities, such as domestic banks, around dividend payment dates to reduce or avoid withholding tax. 

(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes and Hugh Lawson)