Sale Price for Swiss Bank Tied to 1MDB Likely to be Cut
11 August 2016 - 4:00AM
Dow Jones News
ZURICH—The likely sale price for BSI SA, a Swiss bank embroiled
in the controversy surrounding Malaysian state investment fund
1Malaysia Development Bhd., or 1MDB, has been sharply reduced after
the wealth manager saw billions of dollars in client assets
disappear during the first half of the year.
Zurich-based bank EFG International, which announced earlier
this year that it plans to buy BSI, said in a statement on
Wednesday that the price it will pay for the bank may be slashed by
140 million Swiss francs ($143 million). EFG International had said
in February it planned to pay roughly 1.33 billion francs for
Lugano-based BSI, in a deal expected to close later in the
year.
EFG International said Wednesday that the sale price is subject
to adjustments based on financial factors such as gains in new
assets to manage. BSI said in its own statement on Wednesday that
its total client assets fell by 10.6 billion francs during the
first half of 2016, to 73.7 billion francs.
The decline, BSI said, was mainly related to regulatory actions
taken against the bank earlier this year in Switzerland and
Singapore.
In May, Switzerland's financial regulator, Finma, said BSI had
breached money-laundering regulations tied to its business with
1MDB, and ordered the bank to pay 95 million francs in related
profit to Switzerland's public coffers. At the same time, Singapore
regulators ordered BSI's local branch to shut down operations,
after also finding that BSI had breached money-laundering
regulations.
The Wall Street Journal has previously reported that
investigators in several countries are gathering evidence about
1MDB, and believe that as much as $6 billion was siphoned from the
public fund—with much of that funneled through BSI in Singapore,
according to court records, documents viewed by the Journal, and
people familiar with the probes, the Journal has reported.
1MDB was established several years ago by Malaysian Prime
Minister Najib Razak to spur economic development. Mr. Najib has
denied wrongdoing or taking money for personal gain. 1MDB has
denied wrongdoing and said it is cooperating with investigations in
Malaysia and abroad.
Switzerland's Finma said in May that BSI failed to adequately
monitor its relationships with clients who had ties to 1MDB and
maintained about 100 accounts at the bank. BSI has said previously
that all of its client relationships related to 1MDB were closed
early last year. BSI has also appealed Finma's May ruling, which
the bank said harmed its reputation.
EFG International said Wednesday it expects its purchase of BSI
to close in the fourth quarter. BSI is currently owned by Brazilian
bank BTG Pactual.
Write to John Letzing at john.letzing@wsj.com
(END) Dow Jones Newswires
August 10, 2016 13:45 ET (17:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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