UBS Group will stand trial in France facing accusations of assisting clients in avoiding tax.
According to judicial sources, UBS may face a fine as high as $5.3bn (£4.3bn) amid allegations that it assisted clients throughout Europe in tax avoidance.
In 2014, UBS settled a similar case in Germany for an estimated €300m (£260m).
Shares in the Swiss firm were down 1.6 per cent.
During negotiations with France’s financial prosecutor over a possible €1.1bn settlement, UBS general counsel Markus Diethelm said last week that he was “very pessimistic” about reaching a compromise on the situation.
Today however, French magistrates have ordered that UBS stand trial for aggravated tax fraud and money laundering as well as illegally offering related services, a judicial source said.
Magistrates were expected this week to order a trial in the case, after negotiations failed to produce a settlement in the long-running probe into allegations UBS helped clients avoid taxes.
“UBS has made clear that the bank disagrees with the allegations, assumptions and legal interpretations being made,” the bank said in a statement. “We will continue to strongly defend ourselves and look forward to a fair proceeding.”
France ordered UBS to hand over tax information concerning accounts of both current and former French domiciled clients last summer.
At the time, the bank said: "The legal grounds for this request are ambiguous at best."
Earlier this month UBS announced it was slashing its bonus pool by nearly 20 per cent due to prevailing volatility across global markets.