Swiss private bank BSI, embroiled in 1MDB probe, close to being sold, say sources

Swiss bank BSI’s Singapore office at Suntec City.
Swiss bank BSI’s Singapore office at Suntec City.PHOTO: ST FILE

SAO PAULO/ZURICH (REUTERS) - Brazil's BTG Pactual is in talks to sell its private-banking unit BSI to fellow Swiss rival EFG International, which is controlled by the Greek billionaire Spiros Latsis.

The deal could be announced as early as next week, two sources with knowledge of the plan said on Friday (Feb 19).

The plan under discussion would leave investment bank BTG Pactual with a stake of 20 per cent to 30 per cent in the combined BIS-EFG entity, said the first source. Whether EFG incorporates BSI, or vice versa, will be decided based on the most efficient tax structure, the source said.

BTG Pactual could partly receive payment for BSI in cash, the sources said. EFG and BTG Pactual agreed not to adjust the value of the deal should BSI have to pay a fine related to investigations at troubled Malaysian government fund, 1Malaysia Development Bhd, the source said.

One of BSI's senior private bankers in Singapore - Yak Yew Chee - had bank accounts containing some S$10 million frozen by Singapore authorities as part of investigations surrounding 1MDB.

A deal with EFG would help BTG Pactual move on with a plan to sell assets, raise cash and restore investor confidence in the wake of the arrest of its founder and chief executive André Esteves last November over alleged links to the corruption scandal at energy group Petrobras.

Mr Esteves was the architect of BTG Pactual's purchase of BSI last year for 1.23 billion Swiss francs (S$1.75 billion), which he said would help the independent investment bank grow beyond Latin America.

A price has yet to be determined, although the first source said BSI could be valued at US$1.6 billion (S$2.25 billion) prior to any combination.

According to the second source, who was briefed on the matter, EFG is talking to Swiss financial industry watchdog about the impact of a combination, since BSI is the largest employer in the Swiss canton of Ticino.

BTG Pactual and EFG have been on exclusive negotiations for about a month, the first source added. Other bidders for BSI reportedly included UBS as part of a consortium, Julius Baer and China Construction Bank.

A spokesman for BTG Pactual did not have an immediate comment, as did EFG and BSI.

BSI is ranked among the 15 biggest Swiss private banks with 92.3 billion francs of client assets under management at the end of 2014.