BASEL, Switzerland (Reuters) - UBS Group shareholders refused on Thursday to endorse the performance of the Swiss bank’s leadership last year in a rare rebuke sparked by a French conviction for helping wealthy clients evade taxes.

Axel Weber, Chairman of Swiss bank UBS addresses the company's annual shareholder meeting in Basel, Switzerland May 2, 2019. REUTERS/Arnd Wiegmann

Formal discharge of liability for board directors and senior management, typically a formality, won only 41.7 percent support in a shareholder vote, down from 89.7 percent the year before and below the required majority to pass.

The vote has no immediate repercussions, but analysts say it could leave the leadership more exposed to potential lawsuits from shareholders.

The last time such a vote failed to pass was in 2010, when investors withheld backing for UBS management in 2007 when reviewing performance during the start of the financial crisis.

A French court in February found UBS guilty of illegally soliciting clients and laundering the proceeds of tax evasion, ordering it to pay 4.5 billion euros ($5.1 billion) in penalties.

Chairman Axel Weber told the annual meeting that UBS had to go to court in France to fight the charges because it was unable to strike a reasonable settlement. UBS is appealing against a ruling it has called “incomprehensible.”

PAYING FOR SINS

“I interpret your decision that the uncertainty about the open French court case worries you and you want to keep all legal possibilities open. I can understand this,” Weber said after the vote, noting the case dealt with legacy issues that had nothing to do with current management.

UBS Chief Executive Sergio Ermotti noted that all the other agenda items were approved.

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“It doesn’t seem to be a personal vote against management or the board of directors. We did what was in shareholders’ interests,” he said.

But investors gave UBS leaders a rough ride at the meeting.

“The risks from the past are a bitter reality for us UBS shareholders. The penalties associated with this could cost us several billions,” said Vincent Kaufmann, director of the Ethos Foundation that advises many pension funds.

One retail investor said: “In church remorse comes before penance and then forgiveness for sins. In the Paris court case the bitter remorse for shareholders comes after the penance and with the suspicion that not all past sins have been paid for.”

Investor advisory firm Institutional Shareholder Services last month said shareholders should not sign off on the bank leadership’s performance.

Ethos Foundation had recommended shareholders reject all of the Swiss bank’s executive and board pay proposals, including binding votes on bonuses and pay packages.

Shareholder adviser Glass Lewis also had objections to UBS’s pay plan and recommended investors abstain in the vote on management performance.

But shareholders approved the 2018 compensation report with nearly 80 percent support.

CEO Ermotti took home pay and bonuses of 14.1 million Swiss francs ($13.85 million) last year, down from 14.2 million francs the year before, to be one of Europe’s best-paid executives.

The pay package of his counterpart at Credit Suisse, Tidjane Thiam, was 12.7 million francs.