Abu Dhabi-based Mubadala Development Co. PJSC's attempts to sell Falcon Private Bank AG are facing hurdles due to a misconduct investigation hanging over the Zurich-based unit for allegedly failing to prevent money laundering, Reuters reported May 11, citing five sources.
Swiss authorities are probing Falcon due to its involvement in a corruption scandal surrounding Malaysian investment fund 1Malaysia Development Bhd. Criminal proceedings were launched against Falcon in 2016, the same year in which Singaporean authorities penalized the private bank over breaches in its money-laundering controls related to the 1MDB scandal.
Mubadala has been in sale negotiations with potential buyers for Falcon, including Banque Havilland SA, according to three of the sources. The Luxembourg lender reportedly carried out due diligence on the Swiss private bank in early 2018, but deal talks broke down in early May.
Other interested parties have also been invited to bid for Falcon. However, none of them have made concrete offers over fears of the private bank facing potential regulatory sanctions linked to the 1MDB scandal, the sources said.
Additionally, Banque Havilland and the other potential buyers were looking for a large discount in Falcon's purchase price due to its reputational risk, but Mubadala found the offered prices "unappealing" and would not compromise on the valuation of the private bank, the sources told the newswire.
Mubadala became the full owner of Falcon in 2017, after the fund's merger with another Abu Dhabi state-owned fund, International Petroleum Investment Co. Falcon has about CHF10.5 billion in AUM and CHF13.1 billion of client assets.