More woes for 1MDB-linked BSI

1mdb-bsi

ZURICH: The likely sale price for BSI SA, a Swiss bank embroiled in the 1Malaysia Development Bhd saga, has dropped sharply.

This is because clients have withdrawn billions of dollars from the wealth manager during the first half of the year, according to a report in the Wall Street Journal.

Zurich-based bank EFG International, which announced earlier this year that it planned 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 (RM576 million)

EFG International had said in February it planned to pay roughly 1.33 billion francs (RM5.5 billion) for Lugano-based BSI, in a deal expected to close later in the year.

The WSJ reported EFG International as saying Wednesday that the sale price was 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, according to the WSJ.

At the same time, the Monetary Authority of Singapore ordered BSI’s local branch to shut down operations, after finding that BSI had breached money-laundering regulations.

The Wall Street Journal had previously reported that investigators in several countries were gathering evidence about 1MDB, and believed that as much as USD6 billion was siphoned from the public fund—with much of that funnelled through BSI in Singapore.

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.