(Bloomberg) -- UBS Group AG’s French unit offered an elite team of bankers fancy cars and big bonuses to attract wealthy clients in France, sparking tensions with the Swiss headquarters as a result, according to a former executive at the lender who’s on trial in Paris.

Patrick de Fayet told a criminal court on Wednesday that UBS France SA, which “started from zero” when it was set up in 1999, targeted “the best” bankers in the country who would lure customers with tickets for sports events such as the Roland-Garros tennis championship.

While de Fayet, the former head of front office at the French unit, faces a charge of aiding and abetting, the Zurich-based bank is accused of sending employees across the border to illegally poach clients and launder money that hadn’t been declared to France’s tax authorities.

“To get them you needed to pay -- so they were offered beautiful cars, high salaries and bonuses,” de Fayet, 63, said. “We had as many as 140 bankers in France. It was a war machine.”

‘Strong Pressure’

De Fayet said the French bankers were under “strong pressure” to get results but would often find out that prospects they were trying to get on board were already clients of UBS in Switzerland. That meant UBS France employees would be left with the scraps such as entrepreneurs who were seeking products that fetched very small returns.

He said UBS France persevered, increasing the assets it had under management with acquisitions, organizing client events and also using databases that listed new owners of expensive BMW cars.

“It was very hard to make any money at the start,” de Fayet said. “The first time we became viable -- it may have been 2007 -- we popped some champagne because it was quite a nice performance.”

UBS is also suspected of helping clients launder undeclared money, an allegation that can lead to fines of as much as half the amount of the funds stashed offshore. Under one estimate, investigators say the Swiss bank managed 10.6 billion euros ($12.2 billion) in undeclared cash from French citizens -- putting the maximum fine at 5.3 billion euros.

Cut a Deal

Last year, the Frenchman sought to cut a deal with the prosecution and plead guilty to avoid a trial but judges refused to approve the accord.

His lawyer, Christian Saint-Palais, said last week that de Fayet’s aborted guilty plea should only be seen as a negotiation to find a “painless exit.” The banker “will defend himself as he’s been defending himself since 2009,” Saint-Palais said.

To develop UBS France’s clientele, bankers would organize events -- with the help of Swiss counterparts. While UBS bankers came from Switzerland at such events, de Fayet denies having ever seen any poaching of new clients. He says the Swiss UBS counterparts were simply attending to their existing clients to avoid losing them.

“Roland-Garros costs a fortune -- maybe something like 60,000 euros each year for box seats and a lunch service,” de Fayet told the court on Wednesday to explain why the lender’s head office in Zurich took on some of the cost. Still, Swiss and French bankers didn’t share the box, they used it each at different times, he said.

‘Constant Pressure’

Judge Christine Mee expressed puzzlement at the “constant presence” of Swiss bankers from UBS in France.

De Fayet replied that it was “very important to look after clients” worth tens of millions of euros as a “form of protection.”

“If you don’t regularly visit a client then it’ll be your rival that comes to do it instead of you,” the former UBS France executive said. “Since I’ve been doing this line of work it has always been like that, especially if the markets are in a bad mood and the client has lost some money.”

On top of that, he said, UBS bankers in Switzerland were always aiming to increase the so-called share of wallet they managed for existing clients.

“So long as you don’t have 100 percent, your boss will give you a kick in the backside and ask you why you don’t have a larger share,” he said.

To contact the reporter on this story: Gaspard Sebag in Paris at gsebag@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, Geoffrey Smith

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