EFG International took a hit in Asia after swallowing scandal-tarnished Banca della Svizzera Italiana, or BSI. The Swiss bank's CEO clarifies EFG's plans in the region following the tortuous merger.
Zurich-based EFG grappled for months with acquiring BSI, the Lugano-based Swiss bank that imploded under the heft of the 1MDB scandal two years ago. The merger including a dicey technical migration now over, EFG is returning to the hunt for growth.
Asia will remain one of the bank's cornerstones, CEO Giorgo Pradelli told Swiss newspaper «Finanz und Wirtschaft» (in German, behind paywall) on Monday. «Asia is important for us,» Pradelli told the paper.
EFG is profitable in the region, the CEO noted. «It becomes problematic when banks focus too strongly on winning market share, as opposed to profitable growth.» The bank's Asian-booked assets total north of $20 billion, split evenly between offices in Singapore and Hong Kong.
1MDB Fallout
The bank was looking to expand when it revealed plans to snap up BSI, a local rival, for $1.3 billion in 2016. Shortly afterwards, BSI was engulfed in the 1MDB scandal, a move which cost the bank its license to operate in Singapore.
The episode was torrid for both BSI and for EFG, which was mid-acquisition when the scandal broke: clients fled, taking their assets with them. EFG has nearly stanched those outflows, and isn't carrying substantial risks from the controversial deal, Pradelli said: the bank has hedged itself financially, including with funds held in escrow against potential future risks.
Asia vs Europe
Separately, the bank is now purging its wider book of so-called undesirable assets. In Asia, the bank is aiming for entrepreneurs who have earned their fortune, and want to trade and be active, Pradelli said – unlike in Europe, where clients are generally more receptive to products like discretionary mandates managed by the bank.
«In Asia, our client wants direct access to capital markets. He wants to be active and to make his own decisions,» according to Pradelli. Earlier on Monday, the CEO disclosed plans to slim management ranks as well as separate his top executives from regional heads such as Albert Chiu, EFG's long-standing Asia head.
