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French judges cuts 1 bln euro HSBC bail in tax fraud case- source

PARIS (Reuters) - A French appeals court has reduced a 1 billion euro ($1.1 billion) bail for HSBC Holdings (HSBA.L) in a tax fraud case to 100 million euros, a source close to the matter said on Monday.

The decision offers the bank some relief as various tax, regulatory and legal authorities look into allegations that its Swiss private bank helped conceal millions of dollars in assets.

French prosecutors had called on judges to confirm the billion euro bail to cover a potential fine over allegations that Swiss private bank had helped clients avoid taxes in 2006-2007.

That sum would have been nearly half the value of HSBC's alleged fraud of 2.2 billion euros, according to a source when the bail was initially ordered. HSBC appealed the bail, calling it excessive.

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Under French court processes, companies can be ordered to post a deposit when they are put under formal investigation, even if charges are not brought.

"The HSBC group takes note of the appeals court decision which partially upholds the appeal lodged in April," a spokesman said.

HSBC Holdings was put under formal investigation in France in April on suspicions that the parent company did not exercise sufficient controls on the activities of its Swiss private bank.

HSBC has admitted failings in controls at the Swiss private bank, but has denied knowledge of fraudulent activity.

(Reporting by Chine Labbe, writing by Leigh Thomas; editing by John Irish)