BSI’s Singapore operations was ordered shut down by the Monetary Authority of Singapore while Swiss financial regulator Finma imposed a hefty fine on it over ties to alleged shady dealings at Malaysian state fund 1MDB.
Finma last month began enforcement proceedings against two one-time BSI executives and ordered the bank to disgorge roughly 95 million Swiss francs (RM398 million) in profits.
In its court filing, BSI has challenged Finma’s assessment of the facts, saying the measures ordered were unlawful and disproportionate under the applicable principles of administrative law.
Analysts say taking Finma to court is a highly unusual frontal attack on the regulator, especially since the bank is expected to “disappear” from the Swiss market soon.
The bank is in the process of being sold to EFG International, a deal originally agreed before BSI made the headlines. It is also facing criminal investigations.
According to a report in Finews.Asia, the reason for BSI taking Finma to court could be simply to salvage its reputation.
Quoting two unnamed sources, the report said BSI feared fallout to its business.
“It is likely that BSI – publicly shamed for its 1MDB dealings – has already seen clients and assets leave the bank over how the 1MDB case has played out in public.
“If BSI wants to stanch those outflows, it makes sense to take a stand.
Lugano, where the bank is based, is another key element in the bank’s appeal, according to two sources familiar with the matter. As one of the oldest banks in Switzerland, BSI’s demise has an enormous political dimension that it might not otherwise have in other regions, and BSI bankers have been in frequent contact with local officials,” the report said.
The Finews.Asia report noted that BSI was relevant to the local economy and that it’s 1,900 staff and clients were horrified at how the bank had been pilloried. They feel that regulators have done little to dissuade the view that it is a “criminal bank”.
BSI felt blindsided by the regulator’s decision on May 23 and decided to appeal after a month-long evaluation with outside lawyers, a source told Finews.Asia.
The report said it now appeared that the last chapter in the 143-year-old prestigious private bank’s history would be decided in a Swiss courtroom.