EFG International said it will pay considerably less to acquire Banca della Svizzera Italiana, or BSI, after the Ticino-based private bank bled client assets in recent months.
BSI's current owner, BTG Pactual, revealed on Wednesday that clients had pulled 6.3 billion Swiss francs in funds from the Swiss private bank in the second quarter.
This brings total withdrawals, which come against the backdrop of hefty sanctions from Swiss and Singaporean regulators over BSI's dealings with scandal-hit Malaysian fund 1MDB, to 9.6 billion in the first six months.
Lower Deal Cost
BSI is in the process of being acquired by Zurich-based private bank EFG International, which also released a statement about the Swiss private bank on Wednesday.
As a result of BSI's asset bleed, EFG will pay 140 million francs less for the acquisition. Originally priced last year at 1.3 billion francs in cash and stock, the final deal price is tied to BSI's success in winning net new money as well as its book value.
Ahead of Schedule
BSI is fighting the Swiss penalties, an attempt to stanch the outflow of client funds which poses a major risk for the private bank. This became apparent in a third statement on the results, this time from BSI itself.
«BSI has shown resilience during this period of adversity, thanks to the loyalty of our clients, the strength and quality of our employees and our conservative approach to managing our balance sheet,» CEO Roberto Isolani said.
«Positive actions taken by the bank have allowed us to strengthen capital and liquidity ratios, maintaining our commitment to provide clients with a solid financial counterparty.»
H1 Loss vs Profit
EFG said the preparation for integrating BSI and for regulatory approvals are ahead of schedule, and the deal will be concluded in the fourth quarter, as previously expected.
BSI swung to loss of 18.3 million francs in the first-half from a 28.1 million profit in the second half of 2015.
The first-half result was riddled by fines related to 1MDB, the disposal of a minority stake in Swiss outsourcing specialist B-source, extra spending to retain private bankers, and expenses to end an IT deal.
BSI's assets under management dropped to 76 billion francs, from 87.7 billion at year-end.