This website uses cookies. By using the site you are agreeing to our use of cookies. Read our cookie policy here. Banking crises are back. Dividend arbitrage strategies involve the placement of shares in favourable tax jurisdictions with the aim of minimising tax on dividend payments. These trading strategies have existed for many years and are not automatically problematic.
Other criminal, tax, regulatory or civil consequences may also follow. It is also worth noting that national authorities are coordinating their investigations. For example, it is understood that German investigators assisted French investigators involved in the recent cum-cum raids, while HMRC is carrying out investigations in the UK at the request of the German authorities.
Against that backdrop, the potential scale of unexpected fines and penalties arising from cum-ex and cum-cum trading cannot be ignored.
Nevertheless, even though the raids in France are something of a new development and global financial conditions have changed materially, the embers of cum-ex and cum-cum trading have been smouldering for a while now.
Given the sheer number of parties involved in cum-ex and cum-cum trading and, therefore, their collective capacity to absorb losses , the slow pace of investigations, and political feeling around the health of the banking sector, it is unlikely that cum-ex and cum-cum trading investigations will provide the spark that sets off a European banking crisis. That is not to underplay the threat posed to the balance sheets of individual European banks and other financial institutions by the risk of criminal, regulatory, tax and civil litigation-related consequences arising from ongoing European investigations.
