BTG, which bought BSI from Generali in 2014, confirmed in a statement that it is set to clawback $105.5m issued in fines in the period prior to the acquisition.
“BTG Pactual will seek indemnity as contemplated in the contract with the Generali Group for the above fines and losses since such failures occurred before the completion of BSI’s acquisition by BTG Pactual,” read the statement.
The bank also revealed that it has received regulatory approval to sell BSI to Swiss rival EFG International. The deal, originally priced at CHF1.33bn (£926m, $1.3bn, €1.2bn), will reportedly go ahead at a reduced price.
Fines
The fines include CHF95m issued by the Swiss Financial Market Supervisory Authority (FINMA). The regulator found that between 2011 and April 2015, BSI’s failures in control and compliance allowed its accounts to be used by Malaysia’s state-owned investment fund – 1MDB – to illegally siphon off public money into the pockets of prime minister Najib Razak and his cronies.
The move coincides with the Monetary Authority of Singapore (MAS) announcement on Tuesday that it has also fined BSI S$13.3m (£6.7m, $9.6m, €8.6m) for breaching the watchdog’s guidelines on the prevention of money laundering and countering the financing of terrorism.
Describing the scandal as the “worst case of control lapses and gross misconduct seen in the Singapore financial sector”, the regulator said it intends to withdraw BSI’s merchant bank status after uncovering persistent weaknesses in its risk management processes and internal controls.
In the first move of its kind since 1984, the MAS has also referred six former and current BSI employees to Singapore’s public prosecutor for criminal investigations.
