Falcon Private Bank is reportedly poised to sell off roughly half of its assets. Its Middle Eastern owner is said to have cold feet about the wealth manager's prospects.
The Swiss private bank's owner, the government of Abu Dhabi, solicited bids for 5 billion Swiss francs ($5 billion) of assets it manages on behalf of wealthy clients, «Bloomberg» reported on Tuesday. The sum represents half of Falcon's total managed assets, which slipped to 10 billion francs last year.
The development is the latest to hit Falcon in a tumultuous three-year period during which it was sent packing from Asia for its involvement in the 1MDB graft scandal. The bank was also heavily sanctioned in Switzerland for ignoring staff warnings about the corruption, which allegedly involves a prominent former Abu Dhabi investor and Falcon director.
CEO Undermined
The report that owner Mubadala has put part of Falcon on the block undermines altogether cheerier remarks made by CEO Martin Keller (pictured below) to finews.com in December. Keller, who is 18 months into attempting to mount Falcon's comeback around crypto assets and digital private banking, said the Swiss bank enjoys the backing of Abu Dhabi.
The emirate has had to pump money in to keep the bank going. According to conventional wisdom among veteran Swiss wealth managers, Adu Dhabi would prefer to continue to do so instead of admitting defeat. A spokesman for Falcon in Zurich declined to comment. Mubadala also didn't comment.
Falcon will post its third consecutive full-year loss in 2018, and is still is under close scrutiny of Swiss regulator Finma over the 1MDB scandal. Its 10 billion francs in assets represent the bare minimum that a Swiss wealth manager can get by on – if Falcon wants to survive it urgently needs to hike its assets.
Initial Successes
Keller has managed some success so far: Falcon reinforced its crypto offering in January, allowing clients to transfer cryptocurrencies to and from wallets held directly at the bank and convert their crypto holdings into fiat.
By contrast, the CEO has had to and has suffered a near-total exodus in its top management. Keller has replaced some with ex-Banque Cramer executives. He has also received overseers from the emirate including Alastair Fiddes as operating chief as well as Matthew Hurn as a director.
It is not the first time that Falcon has had to tussle with sale rumors: Luxembourg-based Banque Havilland flirted with a bid last year. The negotiations however came to nothing, because Falcon is still mired in the corruption scandal.
