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Zurich’s private bank Falcon, controlled by Abu Dhabi shareholders, will be liquidated. The attempt to return the bank to the profit zone through a technology offensive has failed.
Falcon Private Bank wants to withdraw from the banking business.
The realignment failed despite strong efforts by management around Martin Keller. The Zurich Falcon Private Bank faces an orderly process, which should be announced within a week. The first step is to withdraw from the banking business.
The focus is on the sale and transfer of client portfolios to interested banks and asset managers. At the end of this first phase, which should take around two years, the bank will return its license to the supervisory authority Finma. In a second step, Falcon, which has failed to break out of the loss zone in recent years and has recently managed less than CHF 10 billion after constant cash outflows, will go into liquidation.
Surprisingly unspectacular
How did it get so far? At a press conference called on short notice on September 1, 2016, Eduardo Leemann, the bank’s longtime boss, announced surprisingly unspectacular things. He had always wanted to resign when he was sixty years old, and now the time had come. Beginning October 1, Walter Berchtold, a former senior banker at Credit Suisse, will move from the Falcon Board of Directors to the bank’s chief operating officer and become his successor. When Leemann was asked if his dismissal had anything to do with the fraud and money laundering scandal that had been made public about Malaysia’s sovereign wealth fund 1MDB, the latter responded with a clear no.
About a month later, Berchtold, as the new boss, announced at a new morning meeting with media representatives that the Singapore supervisory authority had withdrawn the license from the Falcon branch there due to serious violations of the laundering regulations. of money.
In Switzerland, the supervisory authority Finma was no less strict with Falcon. The two representatives of Aabar Investments PJS, the owner of Falcon of Abu Dhabi, had abused the bank in their role as members of the Falcon board as a gateway for large-volume private businesses. Finma narrowly refrained from withdrawing a license, confiscated the illegally obtained earnings and sent Aabar’s two representatives into the desert.
Just a year later, in September 2017, Berchtold, who started with great vigor, surprisingly landed. And with him, the Chairman of the Board of Directors, Christian Wenger, also announced his resignation. Apparently, differences in contractual agreements led Berchtold to resign immediately. The Abu Dhabi owner is said to have failed to deliver on his promise to take Berchtold to the bank.
A missed opportunity
In his short term, Berchtold had the entire bank examined, released him from inherited problems, and put him in a new position in terms of liquidity and capital, also thanks to a grant from the owner. Falcon reported a loss of CHF 128 million in 2016. In retrospect, the impression emerges that, with Berchtold’s departure, he was probably given the last chance to return to the path of success by the bank, which had a bad reputation.
Berchtold’s successor, Martin Keller, set out to strategically realign the Falcon, which had a new base. It focused them on a few core markets, reduced the complexity of the business model, reduced the cost base, and improved asset management technologically. As a result, Falcon later became the first Swiss private bank to provide its clients with access to blockchain asset management solutions.
Despite the technology offensive and the hiring of new managers and consultants, Falcon was unable to return to the profit zone as planned since mid-2019. The owners were too impatient, and are said to have even tried to sell the bank behind their backs. of the administration. It is now expected that the Falcon chapter will be closed in an orderly manner and that harm to all involved will be minimized.
