HSBC Swiss office
HSBC's swiss subsidiary allegedly helped wealthy clients across the globe dodge taxes.Reuters

France's financial state prosecutor has requested that HSBC's private banking arm be sent to criminal trial for alleged tax fraud, a judicial source said.

HSBC said in a statement: "This is a normal step in the judicial procedure and the outcome of the matter is not determined as of today."

The recommendation follows a lengthy investigation by local magistrates into alleged tax fraud involving 3,000 French taxpayers, that ended in February, following the publication of files leaked by IT expert turned whistleblower Hervé Falciani.

The global bank has admitted failings in compliance and controls in its Swiss bank, but Le Monde reported HSBC has refused a plea deal that would have avoided a trial. It said HSBC would have had to pay a €1.4bn (£1bn, $1.4bn) fine as part of that deal.

Multiple trials

This procedural step that brings the Swiss banking arm one step closer to a possible trial in France, after French magistrates put the bank under formal investigation last November.

The bank now has one month to respond after which magistrates will have the final word on whether to hold a trial. Meanwhile, cases against specific clients of the Swiss bank are already in progress in France.

Britain's financial watchdog said on 16 February it will investigate HSBC to ensure the failings are behind it, after reports also emerged that it helped customers conceal millions of dollars of assets in a period up to 2007.

US officials also opened a criminal investigation.