Falcon Denies Sale Talks Amid 1MDB Probe

Falcon Private Bank, Walter Berchtold, sale, denial, Khadem al-Qubaisi, Tobias Unger

Swiss Falcon Private Bank, which has come under pressure for its involvement in the scandal surrounding Malaysian state fund 1MDB, isn't for sale. The denial underscores the uncertainty hanging over the bank.

Falcon is owned by Abu Dhabi sovereign wealth fund International Petroleum Investment Co (IPIC), whose former head Khadem al-Qubaisi is being investigated by Swiss officials on suspicion of fraud, money laundering and corruption in connection with 1MDB.

Falcon itself has been named and shamed in Singapore alongside Banca Svizzera della Italiana, or BSI, which has been shut down in the city-state, and UBS, among others.

The bank switched in a new chairman shortly after al-Qubaisi was sacked in April, lost its long-standing deputy head Tobias Unger in July, and abruptly replaced its CEO with Swiss banking veteran Walter Berchtold last month. 

No Sale Talks

Against this backdrop, no one would be surprised to see Abu Dhabi drop Falcon, which is a tiny part of the $130 billion in assets managed by two funds being merged in the Gulf state.

However, the bank denied an item in Swiss finance blog «Inside Paradeplatz» (in German) that Berchtold has been told to find a buyer for Falcon and had already spoken to Swiss rival Banque Heritage.

«Falcon Private Bank wasn't and isn't for sale. There were no talks with Heritage about a possible sale,» the bank said in a statement. A spokesman said Falcon is mulling pursuing legal action against the blog.

Sweat Out 1MDB

To be sure, the bank – which recorded 9.1 million Swiss francs in net profit in 2014 – can sweat out the 1MDB probe for as long as it needs to, thanks to its cash-rich Middle Eastern owners.

The larger question is of reputational and operational damage to the bank, which manages more than 15 billion Swiss francs.

Falcon's involvement in 1MDB has proven far trickier for regulators in Singapore and Switzerland to untangle because its Asian executives deferred relationships with key clients – which 1MDB representatives would have been – to the Zurich headquarters. 

For this reason, the investigation into Falcon is still ongoing.


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