SAO PAULO: BSI SA, a Swiss private bank in the process of being bought by rival EFG International AG, saw net second-quarter new money outflows of 6.3 billion Swiss francs ($6.4 billion) amid sanctions over business ties to a scandal-hit Malaysian government fund.
The information on BSI net outflows was disclosed by Grupo BTG Pactual SA, the Brazilian investment banking firm that currently owns BSI. BTG Pactual said on Tuesday that profit fell in the second quarter, partly after wealth management income suffered with the BSI outflows.
Lugano, Switzerland-based BSI is appealing a May decision by Swiss financial watchdog FINMA, which alleges that BSI breached money laundering rules through a business relationship and transactions linked to 1Malaysia Development Bhd.
The Malaysian fund known as 1MDB is thought to have carried out $4 billion in irregular deals in recent years. Investigators in several countries are trying to determine whether related transactions between 1MDB, banks and clients were funneled into the accounts of influential powerbrokers and politicians.
FINMA ordered BSI to hand over profits amounting to 95 million Swiss francs and to shut down once it has been integrated into EFG. BSI said FINMA’s decision was “incorrect.” Singapore has also ordered that BSI’s operations in the city-state be closed down.