* Prosecutors want bank to answer money laundering charges
* Magistrates to decide whether or not to hold trial
* HSBC refused plea bargain and 1.4 bln euro fine - Le Monde (Adds details)
By Chine Labbé
PARIS, March 13 (Reuters) - The French financialprosecutor's office has requested that HSBC's Swissprivate bank be put on trial in France to answer charges over asuspected tax-dodging scheme for wealthy customers, a judicialsource said on Friday.
The request brings the Swiss unit one step closer to facingtrial after an investigation led by local magistrates into analleged fraud involving thousands of French tax payers endedlast month.
The probe was sparked by whistleblower Herve Falciani, aformer IT employee at HSBC, who alerted authorities to thealleged misconduct and was subsequently charged by Switzerlandwith industrial espionage and breaching security laws.
Parent company HSBC Holdings Plc, the world's second largestbank, faces a separate ongoing French investigation.
Prosecutors want the Swiss bank tried on suspicion of moneylaundering related to tax fraud and unlawful soliciting ofclients, the source said, adding the "habitual" manner of thealleged fraud made it an aggravated crime.
Another, non-judicial, source close to the case said therehad been talks on a plea deal which had failed.
Under French law, the Swiss bank risks a fine amounting tohalf the value of the funds subject to the suspected fraud.France's Le Monde newspaper estimated on Friday the amount ofhidden assets at more than 5 billion euros.
HSBC's Swiss private bank said the request for trial was anormal step that did not prejudge the result of the case. "Theoutcome of the matter is not determined as of today," aspokesman said.
The bank now has one month to respond to French judicialauthorities, after which magistrates will have the final word onwhether to hold a trial.
Le Monde reported on Friday that HSBC had refused a pleadeal that would have avoided a trial but required it to pay a1.4 billion euro ($1.5 billion) fine. Contacted by Reuters, theFrench financial prosecutor's office refused to comment.
HSBC Holdings has admitted failings in compliance andcontrols in its Swiss bank. It also faces investigation by U.S.authorities and an inquiry by British lawmakers after reports ithelped customers to conceal millions of dollars of assets in aperiod up to 2007.
About 30 legal cases against specific clients of the Swissbank are already in progress in France and prosecutors in Genevahave also opened a criminal probe into the bank.
One of the first to be tried in France from the list wasArlette Ricci, heir of the Nina Ricci perfume fortune, lastmonth. She is suspected of hiding more than $22 million fromFrench tax authorities via a bank account kept by the Swissbank, but denies all charges.
From the listings provided by Falciani, authoritiesconcentrated on about 3,000 names of French citizens potentiallyinvolved in the affair. Le Monde said as many as 8,936 citizensactually hid their money with the Swiss unit between 2006-2007.
"The amount held by just French clients, hidden behindoffshore companies furnished by HSBC Private Bank, comes to 5.1billion euros," the newspaper reported.
($1 = 0.9449 euros) (Writing by Alexandria Sage; Editing by Catherine Evans andMark Potter)
HSBC Holdings (HSBA)