Swiss financial regulator Finma has decided to reduce the profit clawback from BSI by CHF25m ($27.5m) for its ties to the 1MDB Malaysian state fund scandal.
The watchdog has now asked the bank the profit to hand over profits amounting to CHF70m from the bank instead of the original CHF95m.
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“In making this reassessment, it considered those income and costs of the bank that were closely linked to the violations of supervisory law in business relationships in the context of 1MDB.,” the regulator said in a statement.
The reduction of profit disgorgement is the result of BSI’s appeal to the Swiss Federal Administrative Court, which found Finma’s calculation of the amount seized from the bank “incomprehensible” even though it confirmed serious law breaches by the bank.
Moreover, Finma banned two individuals, one of whom made a serious violation of supervisory law. However, the regulator did not order any other measure against this individual and closed the proceedings.
In the case of the other banned individual, the regulator concluded the proceedings fter the individual agreed not to accept a managerial position at a supervised institution in the future.
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By GlobalDataThe regulator also issued reprimands to another four individuals.
EFG, which has taken over BSI, has taken note of the reassessment and said that its financial results will not be affected.
The private bank said: “This decision follows a ruling by the Federal Administrative Court in December 2019, which had confirmed FINMA’s assessment of the case but had remanded the aspect of the disgorgement amount to FINMA.
“As announced previously, EFG’s financial results will not be impacted by the modified disgorgement amount as the final purchase price for the BSI acquisition accounted for a respective provision, with the difference now being released for the benefit of the seller.”
Background
EFG announced the acquisition of BSI from Brazil’s Grupo BTG Pactual for CHF1.33bn in February 2016.
The deal was closed for CHF1.06bn in October 2016 though the companies did not enter into any definitive agreement. In July 2017, the companies agreed on a final price of CHF971m for the transaction.
The price reduction was mainly due to BSI’s embroilment in the scandal. The bank had to shutter its operations in Singapore in May 2016 for its 1MDB links.
