* 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

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By Chine Labbé

PARIS, March 13 (Reuters) - The French financial prosecutor's office has requested that HSBC's Swiss private bank be put on trial in France to answer charges over a suspected tax-dodging scheme for wealthy customers, a judicial source said on Friday.

The request brings the Swiss unit one step closer to facing trial after an investigation led by local magistrates into an alleged fraud involving thousands of French tax payers ended last month.

The probe was sparked by whistleblower Herve Falciani, a former IT employee at HSBC, who alerted authorities to the alleged misconduct and was subsequently charged by Switzerland with industrial espionage and breaching security laws. Parent company HSBC Holdings Plc, the world's second largest

bank, faces a separate ongoing French investigation. Prosecutors want the Swiss bank tried on suspicion of money laundering related to tax fraud and unlawful soliciting of clients, the source said, adding the "habitual" manner of the alleged fraud made it an aggravated crime.

Another, non-judicial, source close to the case said there had been talks on a plea deal which had failed. Under French law, the Swiss bank risks a fine amounting to half the value of the funds subject to the suspected fraud. France's Le Monde newspaper estimated on Friday the amount of hidden assets at more than 5 billion euros.

HSBC's Swiss private bank said the request for trial was a normal step that did not prejudge the result of the case. "The outcome of the matter is not determined as of today," a spokesman said. The bank now has one month to respond to French judicial authorities, after which magistrates will have the final word on whether to hold a trial. Le Monde reported on Friday that HSBC had refused a plea deal that would have avoided a trial but required it to pay a 1.4 billion euro ($1.5 billion) fine. Contacted by Reuters, the French financial prosecutor's office refused to comment.

HSBC Holdings has admitted failings in compliance and controls in its Swiss bank. It also faces investigation by U.S. authorities and an inquiry by British lawmakers after reports it helped customers to conceal millions of dollars of assets in a period up to 2007. About 30 legal cases against specific clients of the Swiss bank are already in progress in France and prosecutors in Geneva have also opened a criminal probe into the bank.

One of the first to be tried in France from the list was Arlette Ricci, heir of the Nina Ricci perfume fortune, last month. She is suspected of hiding more than $22 million from French tax authorities via a bank account kept by the Swiss bank, but denies all charges. From the listings provided by Falciani, authorities concentrated on about 3,000 names of French citizens potentially involved in the affair. Le Monde said as many as 8,936 citizens actually hid their money with the Swiss unit between 2006-2007. "The amount held by just French clients, hidden behind offshore companies furnished by HSBC Private Bank, comes to 5.1

billion euros," the newspaper reported.