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Coutts Faces Client Tax Evasion Inquiry

Coutts, known as the Queen's bank, is being investigated by German authorities on alleged aiding of client tax evasion.

The bank, which is owned by Royal Bank of Scotland (LSE: RBS.L - news) (RBS) and exclusively open only to those of significant financial means, said the inquiry was focussed on its Swiss operation.

It was concentrated on not only the wealth arm itself but also current and former employees, RBS said.

The news came to light just hours after RBS announced its full-year results and two days after Sky News revealed that Rory Tapner, one of the company's most senior bankers, was to leave Coutts as its parent sought to sell off its international operations .

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There is no suggestion of a link between his departure and the German investigation.

The development comes at a time when HSBC's private bank in Switzerland has been mired in controversy over alleged collusion in tax evasion - behaviour its group chief executive Stuart Gulliver and chairman Douglas Flint confronted in a hearing before MPs on Wednesday .

RBS had revealed £2.2bn in litigation and conduct provisions last year - mostly in relation to the PPI mis-selling scandal and manipulation of currency markets.

It said of the latest inquiry: "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 cooperating with the authority."

RBS chief executive Ross McEwan added: "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.

"I think it is too early to pre-judge. 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."