Royal Bank of Scotland's private banking arm Coutts is being investigated over allegations that its Swiss operation helped wealthy clients evade tax.
The disclosure in RBS's annual results comes at a time when rival HSBC is mired in controversy over the way its Swiss private banking subsidiary helped thousands of wealthy clients avoid tax.
RBS said the investigation by German prosecutors involved current and former staff as well as the Coutts bank itself.
The company is looking to sell the international arm of Coutts to focus on its high net worth UK clients.
RBS chief executive Ross McEwan told ITV News that the bank will take "severe action" if any wrongdoing is found in the business.
RBS said: "A prosecuting authority in Germany is undertaking an investigation into Coutts & Co Ltd in Switzerland, and current and former employees, for alleged aiding and abetting of tax evasion by certain Coutts & Co Ltd clients. Coutts & Co Ltd is co-operating with the authority."
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