Swiss buyer upbeat on merger with troubled BSI

Swiss buyer upbeat on merger with troubled BSI

Zurich-based private banking group EFG International, which is taking over the embattled BSI's Singapore operations, is confident about business prospects and of becoming one of the top private banks in Asia.

In an exclusive interview with The Straits Times recently, Mr Albert Chiu, chief executive of EFG Asia-Pacific, in Singapore, said it hopes to retain as many BSI staff as possible.

"The business will significantly increase, so we would need as many staff as required to provide the same, if not better, service to clients," Mr Chiu added.

But the integration comes at a particularly challenging time.

EFG's purchase of BSI Bank from Brazil's BTG Pactual was announced in February. But last month, in a global crackdown on alleged illicit money flows involving Malaysian state fund 1Malaysia Development Berhad (1MDB), the Monetary Authority of Singapore (MAS) ordered the closure of BSI's operations locally while Swiss prosecutors launched criminal proceedings against BSI.

Swiss financial regulator Finma, after enforcement proceedings against BSI over breach of money laundering regulations, approved EFG's purchase on condition that BSI is integrated and dissolved within 12 months.

Asked what EFG has done to minimise the fallout of BSI's closure in Singapore, Mr Chiu said employees have been very professional and that their first priority was to assure clients and pass the correct message to them. "BSI's licence isn't being withdrawn immediately. They are solvent, and have the support of the parent bank."

EFG and BSI are progressing well on the merger.

Mr Chiu indicated that EFG will screen clients from BSI and enforce compliance standards as it integrates the Swiss bank's assets worldwide including in Singapore.

Asked whether new clients would include the scandal-hit 1MDB - at the centre of money laundering and graft probes in at least seven jurisdictions - Mr Chiu declined comment.

"The regulators in Singapore and Switzerland have sent a very clear message that they won't tolerate any lapses in controls on money laundering. From now on, banks will be even much more careful in screening clients, and ensuring all transactions done are within the regulatory framework," he said.

While MAS and Finma have imposed penalties of $13.3 million and 95 million Swiss francs (S$134 million) respectively against BSI, the takeover deal included indemnities against 1MDB and other risks that cover EFG for as much as the 1.33 billion Swiss francs purchase price.

The acquisition is expected to make EFG, which has been in Asia for about 16 years, the fifth biggest Swiss bank worldwide with global assets under management of over 170 billion Swiss francs, he added.

"In Asia, there is very little overlap of the client base, because EFG has a strong presence in North Asia, while BSI is strong in South Asia," he said. "Both are client-focused, solution- driven and entrepreneurial."

Whether the BSI brand will continue to be used is under consideration, Mr Chiu said.

Steps have been taken to ensure that the new bank will not inherit BSI's problems. "Under our business model, we hire only senior and experienced private bankers. They understand private banking is a long-term business, and therefore are not likely to do business for short term benefit," he said.

This article was first published on Jun 10, 2016.
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