Falcon Private Bank may lose Swiss Banking License
Falcon Private Bank, a Zurich-headquartered Swiss Private Banking boutique, is reportedly on the precipice of losing its Swiss banking license following its connection to the 1MDB scandal.
According to reports, the Swiss Financial Market Supervisory Authority (FINMA) may withdraw Falcon Private Bank’s banking license due to the fact that the Bank would no longer meet the requirements needed to be recognised as an authorised practising asset manager.
FINMA may withdraw the license, which is owned by Mubadala Investment Company, a state-owned sovereign wealth fund, in part due to Falcon’s involvement in the Malaysian 1MDB scandal.
Falcon Private Bank reportedly was found by investigators to have transferred nearly GBP564 million from an account with the Bank’s Singapore operation to accounts affiliated with the then Prime Minister Najib Razak, according to a report by Reuters.
In 2016, Falcon was found by FINMA to have violated money-laundering regulations; the Bank had failed to undertake sufficient background checks into the business relationships and transactions associated with the now-infamous 1MDB state fund which were booked in Singapore, Hong Kong and Switzerland.
Following this discovery, FINMA warned Falcon Private Bank that it would lose its banking license should it be discovered to be a repeat offender. Swiss federal prosecutors are continuing the undertaking of a criminal investigation into the Bank’s actions, which was initially opened following the FINMA discovery.
Mubadala Investment Company has reportedly been investigating the possibility of finding a buyer for Falcon, but has failed to snoop out any interest in buying the Bank as a whole. The bank is reportedly still looking to sell parts of its customer base, which is a more realistic prospect for Mubadala.
Walter Berchtold, who stepped down as CEO of Falcon in 2017, attempted to bolster the Bank through the trading of Bitcoin, but butted heads with then-owner International Petroleum Investment Company (IPIC). Berchtold’s successor, Martin Keller, supported in his efforts by Boston Consulting Group, similarly found resistance when making attempts to operationalise the business.
According to the Reuters report, as both key staff and customers jumped ship, Falcon’s AUM tanked, now reportedly standing at approximately in the range of low- to mid-single digit billions.
Two insiders have stated that any efforts to implement a new strategy is unrealistic. “FINMA has given the bank three years to realign the business. Apparently, it wasn’t happy with what was achieved,” said an insider.
The sources said that FINMA gave Falcon until the end of April 2020 to reinvigorate its operations, a deadline which was set for the Bank in October 2019.
A separate investigation carried out by Singapore authorities surrounding Falcon’s involvement in the 1MDB scandal resulted in the Bank’s Singaporean banking license being revoked.