Swiss private bank Cramer wanted to sell its Bahamian subsidiary – until the proposed buyer didn't pay up. Jesus Alejandro Garcia Alvarez, with whom the Genevan bank had clinched a deal, could face a legal tussle over the collapsed sale.
It was just about a done deal. The responsible overseer, the Bahamian central bank, had green-lighted the sale of Private Investment Bank Limited (PIBL), a subsidiary of Geneva-based Banque Cramer. The deal was to have closed this week.
One day later, Cramer's parent company said the sale had been «aborted» – a highly unusual public statement in the world of Swiss private banking, where bankers prefer to close ranks to keep failures from going public.
Ticino Retreat
The fact that an agreed private banking deal collapses at the last minute is unusual enough. This instance is all the more unusual, because it is the second time that a deal involving Mexican businessman Jesus Alejandro Garcia Alvarez implodes in as many years.
Last year, Garcia Alvarez was close to buying Ticino-based Bank Arner, but the deal fell apart last year, reportedly because he was unable to capitalize the bank. IXE Capital, a vehicle of Zurich-based IXE Holding, couldn't pay for PIB.
IXE, the holding company, is controlled by Garcia Alvarez, who claims to be a businessman and wealthy landowner from Mexico. Recently, questions over Garcia Alvarez's wealth, his dealings, and his business plans have been raised by several media outlets.
Sudden Liquidity Crunch?
Garcia Alvarez can expect some backlash over the second failed deal: the sellers were caught unaware by his incapacity to pay, according to people familiar with the transaction, and are angry.
His holding company didn't immediately respond when asked by finews.com to comment.
Garcia Alvarez would well face demands for compensation by Cramer: the private bank's parent highlighted that it felt IXE was in breach of contract over the deal in a statement on Thursday.
Clock Ticking
IXE Capital is made up of a consortium of investors including IPG Securities Asset Management, TR4, and Garcia's Swiss vehicle, IXE Holding. As is customary for purchase agreements, the acquirer had to demonstrate «proof of funds» before the deal was even discussed.
This could indicate that IXE Capital is suffering from a limits to its liquidity that have surfaced only recently.
IXE still has one more deadline, sources told finews.com. The purchase agreements will lapse – definitively – in coming weeks. It remains to be seen whether Cramer will lodge a claim against IXE if and when the negotiations fail altogether.
The subsidiary will remain as an independently-managed part of Cramer, the bank said. The bank hasn't had any other potential takers for the unit, the sources said.
