HSBC revealed that it is facing a criminal investigation in France in connection with the alleged tax evasion at its Swiss private bank.

HSBC Faces Criminal Probe In France, To Pay $1.1bn In Bail

French authorities ordered the British multinational bank to pay €1 billion or $1.1 billion in bail while investigating the alleged misconduct between 2006 and 2007.

HSBC said the bail was “unwarranted and excessive.”

In a statement, HSBC said the action of the French authorities has no legal basis, and the “bail is unwarranted and excessive.” The British multinational bank added that it will defend itself “vigorously” in legal proceedings.

HSBC’s Swiss banking unit is entangled with allegations that it helped wealthy customers including drug cartels and terrorists evade taxes and hides assets worth billions of dollars. Leaked documents regarding its wrongdoings prompted several countries to open new investigations against it.

The French authorities’ criminal investigation came five months after HSBC’s Swiss unit has been charged and ordered to post a bail of €50 million. In 2008, Herve Falciani, a former IT employee at HSBC stole client account information from the firm’s office in Geneva and provided them to the French government.

France’s former Budget Minister Jerome Cahuzac was exposed of having a secret Swiss account. He was forced to resign because of the exposé. Since then, French President Francois Hollande strengthened its effort to go after tax evaders.

Commenting on decision of French authorities against HSBC, Gary Greenwood, an analyst at Shore Capital Group in London said, “I suspect this is the French authorities trying to show they aren’t willing to let these issues wash by them anymore, but it’s not clear what ultimate penalty this will lead to. One billion euros is not a lot for a bank as big as HSBC.”

HSBC is suffering from horrible reputational damage

Last February, Lawmakers in the United Kingdom asked HSBC CEO Stuart Gulliver to explain Falciani’s files showing how the bank helped drug cartels and arms dealer in money laundering, and advised clients in tax evasion.

Gulliver admitted to the lawmakers that the bank’s activities in the past were “clearly unacceptable” and a product of a different era.

On the other hand, HSBC Chairman Douglas Flint said the British bank is “suffering from horrible reputational damage” due to its wrongdoings.