HSBC is set to pay around $300m to settle a French criminal investigation into its alleged involvement in the “Cum-Cum” tax scheme, reported Bloomberg, citing sources. 

The Cum-Cum tax scheme refers to trades, allegedly structured to avoid taxes on dividend payments by temporarily transferring shares to a local, tax-exempt entity. 

This settlement with France’s specialist financial prosecutor, Parquet National Financier (PNF), is expected to resolve the criminal case and a related civil tax claim by French authorities. 

It is planned to be presented for judicial review in Paris in the coming weeks. 

The settlement amount aligns with HSBC’s provision for the French probe, as disclosed in its filing in October this year, the report said. 

HSBC’s current settlement with PNF follows a similar agreement reached by Crédit Agricole’s investment banking division in September this year. 

Crédit Agricole’s arm has agreed to pay about €134m ($156m) in fines and back taxes for its role in Cum-Cum transactions. 

This move is expected to increase scrutiny on other banks, including BNP Paribas and its unit Exane, Société Générale, and Natixis, which were subject to large-scale PNF raids in 2023, according to the report. 

French authorities estimate that Cum-Cum trades involving banks in France may have resulted in around €4.5bn in lost tax revenue, and are seeking to recover these funds. 

In this context, PNF has required payment of outstanding Cum-Cum tax liabilities as a condition for resolving related criminal cases. 

The Bloomberg report quoted a PNF prosecutor saying, “Some banks continue to claim” that dividend arbitrage, sometimes called Cum-Cum trades, “doesn’t exist”. 

In May this year, Reuters reported that HSBC was planning to reduce its workforce in France by 348 positions, representing approximately 10% of its total staff in the country.