EFG International said Italy's central bank wants it out of Milan and Como in connection with alleged compliance weaknesses at recently-acquired Banca della Svizzera Italiana, or BSI.
The Zurich-based private bank, which is controlled by Greece's wealthy Latsis family, said it is in close contact with Banca d'Italia over the closing of its BSI acquisition, and the news isn't good.
«EFG International announces that BSI has received a notification by Banca d’Italia requesting the implementation of certain measures, which may result in a closure of the BSI offices in Milan and Como,» EFG said in a statement late on Friday.
The bank rebranded itself following the deal, doing away with the BSI brand, a 144-year-old Swiss bank which was disgraced by its deep involvement in the 1MDB scandal.
Withdrawals Only
Milan and Como, which target onshore Italian clients, manage less than 1 billion Swiss francs combined, EFG said. Just days ago, the bank has reinforced Italy's strategic importance.
The bank didn't elaborate on what exactly the Italian central bank has found fault with, saying only the measures «relate to alleged administrative weaknesses pre-dating the completion of EFG’s acquisition of BSI.»
Clients at the two branches can only withdraw funds or other passive services, but no client accounts have been blocked. The central bank is pushing for EFG to leave entirely.
BSI Worth the Trouble?
EFG hinted it would hit back through an appeal, saying it felt that Italy hadn't considered stricter compliance policies at BSI following the deal. Inspections at the bank were carried out last year, before EFG closed the deal, the bank said.
The bank's business with Italian clients from Switzerland isn't affected by the skirmish, and Italy continues to be a strategic priority for EFG, it said. The bank also maintains a branch on Genoa, which it didn't mention in the statement.
EFG said the overall process it integrate BSI is ahead of schedule and will continue to plan.
Undeniably, the deal may be more trouble for EFG than it has been worth: an office in Singapore was shut by regulatory force, BSI has bled assets, and EFG is squabbling with BSI's previous owner over the purchase price.
