LONDON (Reuters) - UBS plans to stick to its proposed dividend for 2018, CEO Sergio Ermotti said on Friday, two days after the Swiss bank was hit with a 4.5 billion euro ($5.1 billion) penalty in a French tax ruling that the bank has appealed.

FILE PHOTO: A man walks past a UBS logo projected on a screen in Singapore, January 14, 2019. REUTERS/Feline Lim/File Photo

A French court on Wednesday found the Swiss bank guilty of illegally soliciting clients and laundering the proceeds of tax evasion, ordering it to pay penalties including damages of 800 million euros to the French state.

UBS said the court’s decision was “incomprehensible” and that the bank would appeal. In a separate newspaper interview, Ermotti was quoted as saying negotiations with French authorities initially involved discussions of a settlement figure of as little as 40-100 million euros.

Ermotti, speaking to analysts and investors on a call to review the implications of the French ruling, said: “There is no intention to deviate from our proposed 2018 dividend of 0.70 Swiss francs per share.”

“In respect to the outlook for our capital returns beyond the financial year 2018, we remain committed to our policy,” he said. That included increasing the group’s dividend by a mid- to high-single digit percentage each year and returning any excess capital, mainly through share buybacks, he added.

“Of course, as we always say we need to consider our business outlook including the impact of any idiosyncratic events like this one. In this respect, in the event of a very adverse scenario, our priority would always be to protect the previous year’s dividend,” Ermotti said.

UBS General Counsel Markus Diethelm said the court’s ruling was unexpected and unsupported by facts. Diethelm told analysts that the bank expected a court of appeals to “correct the mistakes” of the prior ruling, saying the previous court had provided “not a shred of substantiation” for the penalties set.

UBS, the world’s largest wealth manager, is now assessing how the ruling will affect its finances and whether it must bulk up on litigation provisions, which stood at $2.45 billion at the end of 2018, Ermotti said. The Zurich-based bank expected to complete its assessment by publication of its annual report on March 15.

Analysts at Vontobel said they expected to see additional provisions of 1.6 billion Swiss francs ($1.60 billion) over the 2019-2021 period. Credit Suisse analysts expect UBS to scale back its buyback plans to fund an additional $2 billion of litigation provisioning in 2020 and 2021.

UBS had previously turned down a settlement offer of 1.1 billion euros in the French case, according to a source close to the matter.

Ermotti on Friday said the bank stood by its decision not to settle.

In an interview with the Swiss Aargauer Zeitung, he said negotiations with French authorities initially involved discussions of a relatively modest settlement.

“But then French authorities suddenly stepped back from that, and the talk was of much, much higher sums,” he said.