Falcon Private Bank's emirati owners are helping the Swiss wealth manager recuperate – while at the same time quietly pursuing a sale, finews.com has learned. Project «Phoenix» could augur the end of the 54-year-old private bank.
The Zurich-based bank's website's shiny gold branding and «Ready For Agile Private Banking?» slogan is not quite two years old. «Fragile» describes the situation more accurately: CEO Martin Keller is attempting to rebuild management following an exodus.
His goal is to bring on new teams and money to return to profitability; last year, Falcon's losses deepened to 32 million Swiss francs, from 28 million francs the prior year (when owner Adu Dhabi had to pump money in).
Commitment with Grain of Salt
Keller, a former Credit Suisse banker and former Falcon board director, doesn't stand much chance of succeeding, is the conventional wisdom among Zurich's close-knit guild of private bankers. Falcon's disastrous foray with scandal-hit Malaysian fund 1MDB is a body blow.
The CEO enjoys strong support from Mubadala, the sovereign wealth fund of Abu Dhabi. Last autumn, the fund greenlighted a recovery strategy, after months of deliberation. Its committment to Falcon, which represents a modest investment in the scheme of its $225 billion overall portfolio, is nevertheless to be taken with a grain of salt.
Asset vs Units Sale
Falcons owners initially pursued a sale this spring, only to abandon it by May (apparently due to indecision over what type of sale to pursue). The process of looking for a buyer or buyers is to be resumed in the third quarter, two people familiar with the matter told finews.com.
The project, dubbed«Phoenix» internally, has until now been in the hands of Deloitte. The consulting firm has received offers for some of the banks assets as well as some activities, the people said. Ongoing regulatory proceedings over 1MDB have hampered a sale, they noted. A spokesman for Falcon didn't comment on whether «Phoenix» is being revived.
Emirate Prison Sentences
In June, two former Falcon board members – Khadem Al Qubaisi and Mohammed Badawy Al Husseiny – were sentenced to prison sentences of 15 years and 10 years, respectively. Switzerland's attorney general is still investigating the bank for allegedly failing to spot money laundering and corruption in its clientele.
«Phoenix» is being driven by Matthew Hurn, a Falcon director who represents Mubadala on the Swiss bank's board. The British banker has worked for Abu Dhabi's state fund since 2008, most recently as finance chief for alternative and infrastructure investments.
Incoherent Clash of Plans
The clash of plans – Falcon's recovery vs partial or asset sales – isn't immediately coherent. Hurn didn't respond to a request for comment from finews.com. To be sure, Falcon's board is obliged to evaluate all options in the interest of shareholders.
Falcon's owner is keen to draw a line under the 1MDB scandal, which has besmirched the emirate. At the same time, it appears outwardly committed to Falcon as an investment. The hot-and-cold stance make it nigh impossible for CEO Keller and his team to restore the bank to health.
