October 11, 2016: Falcon Private Bank, a Swiss private banking boutique with 50 years of expertise in wealth management, has lost its banking licence in Singapore as a fall-out of the 1MDB case.

The Swiss Financial Market Supervisory Authority (FINMA) and the Monetary Authority of Singapore (MAS) have completed their investigation around Falcon Private Bank’s involvement in the 1MDB case and have notified the bank about their decisions. The investigation was into allegations of misappropriation from Malaysia’s state investment fund 1Malaysia Development Bhd (1MDB) and that the money made its way into Malaysian Prime Minister Najib Razak’s personal bank accounts. Prime Minister Najib Razak and the 1MDB have denied any wrong-doing.

Falcon Private Bank was among those embroiled in the scandal along with several other institutions and individuals. Falcon Private Bank and its shareholder Aabar have welcomed completion of the investigation. Since 2013, the bank has further enhanced its compliance, invested in additional resources as well as reviewed the organisational setup and relevant processes. Furthermore, based on the findings of the regulators, Falcon Private Bank has initiated additional measures to prevent future issues.

With its committed staff, strong capital base and high liquidity ratio, Falcon Private Bank will now concentrate on further growing its franchise. The bank provides financial services to private clients and wealthy families from its headquarters in Zurich and locations in London, Singapore, Abu Dhabi and Dubai.

But now, its Singapore banking licence has been withdrawn. The bank is currently in contact with employees, clients and partners and is committed to finding optimal solutions for all parties involved and guaranteeing an orderly winding down of the Singapore operation.

Walter Berchtold, Chief Executive Officer of Falcon Private Bank, said, “We have been in close collaboration with the regulators and welcome that the 1MDB case has been closed with the regulators. Falcon Private Bank adheres to all rules and regulations, is well capitalised, enjoys a strong balance sheet and the full support of our shareholder Aabar. The bank will now focus again on growing our businesses in the core locations Switzerland, Middle East and London. We are highly confident of our expertise to create a long-lasting, positive customer experience.”

Murtadha M. al Hashmi, Chairman of the Board of Directors, added, “I am pleased that the 1MDB chapter could be settled and very confident that the bank will develop positively on its way to long term growth. Aabar, as shareholder of the bank, remains fully committed to supporting Falcon Private Bank on this future path.”

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Aabar Investments, the Abu Dhabi Government investment vehicle, has helped to raise US$3 billion (Dh11.01bn) in funds in partnership with a Malaysian company to invest jointly in projects such as energy and property.

The cash will be used to kick-start 18 billion ringgit (Dh21.74bn) of economic projects, said 1Malaysia Development Bhd (1MDB), a strategic development company owned by the Malaysian government, yesterday.

“This success underlines investor appetite and confidence in the Malaysia-Abu Dhabi partnership as well as in Malaysia as a sustainable growth centre, enjoying peace, stability and good governance,” said Mohd Hazem Abd Rahman, the chief executive of 1MDB.

Nobody was available to comment from Aabar.

The cash was raised from private placements through Abu Dhabi Malaysia Investment Company, a 50:50 joint venture firm set up by Aabar and 1MDB.

The initiative is the latest deal to emerge following a high-profile visit to Malaysia by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, last month. Sheikh Mohammed used the visit to seal a $7bn investment by Abu Dhabi in an oil storage facility in the Asian country.

At the time, Aabar and 1MDB also announced an investment agreement but details of the deal only emerged yesterday.

Abu Dhabi Malaysia’s first investment could be 1MDB’s Tun Razak Exchange, a planned financial centre in Malaysia’s capital, Kuala Lumpur, 1MDB said. The centre is expected to generate returns of 26bn ringgit for Malaysia’s economy when completed, plus 40,000 jobs.

Investments would be focused on “strategic and important high-impact projects such as energy and strategic property, which are vital to the long term-economic growth of both countries”, 1MDB said.

Aabar is already invested in Malaysia through a 25 per cent stake in RHB Capital.

Reuters reported in February last year that Aabar was looking to sell the stake after it declined in value since it was bought from Abu Dhabi Commercial Bank in 2011.

Aabar has been on a strong acquisition spree in recent years, snapping up stakes in Tesla, the American maker of electric cars, the British aerospace firm Virgin Galactic and taking a $1bn stake in Glencore’s initial public offering. It also has a 21 per cent stake in Arabtec, the UAE construction company.

“Aabar Investments have done this type of joint deal before elsewhere,” said Victoria Barbary, director of Institutional Investor’s Sovereign Wealth Centre. “This deal may be attractive because of the Islamic financing opportunities that Malaysia has through its status as the Islamic finance capital.”

Ms Barbary said Aabar’s strong credit rating would have helped it to raise funds for the deal.

1MDB’s bonds have received an A minus rating from Standard & Poor’s, which also assigned an “axAAA” Asean regional scale rating.

Malaysia is a growing Islamic banking centre, and has targeted a 40 per cent share of Islamic domestic financing by 2020. In a bid to further promote the growth, the Malaysian government is also set to release a new legal framework for Islamic finance this year.

Abu Dhabi is seeking to cement its own foothold in the financial sector by developing Sowwah Square, a Dh4bn centre for financial services.

Source:www.aibim.com

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