Italian insurer Generali has agreed to pay CHF245m (£205m, $260m, €229m) to Brazilian investment bank Banco BTG Pactual to end the litigation over the sale of Swiss private bank BSI.
Generali said: “The arbitration started in 2016 following the completion of the sale of BSI by Generali Participations Netherlands to Banco BTG Pactual in September 2015 and concerned mutual claims and indemnification requests pursuant to the sale and purchase agreement.
“The settlement agreement provides for the payment of CHF245m to BTG Pactual as indemnity and price adjustment, the termination of the arbitration and a waiver of the mutual claims and indemnification requests, without any admission of liability or wrongdoing.
“The net impact on the Generali Group’s first half 2020 results amounts to CHF195m, after taking into account pre-existing provisions to cover legal costs.”
Timeline of events
BTG bought BSI from Generali for $1.7bn (£1.3bn, €1.5bn), but in 2016 it started proceedings to claim back over $100m to make up for the fines the Swiss bank received during the period before the acquisition.
They included CHF95m imposed by the Swiss Financial Market Supervisory Authority (Finma), relating to BSI’s failures over control and compliance for accounts used by Malaysia’s state-owned investment fund 1MDB between 2011 and 2015.
Additionally, the Monetary Authority of Singapore (MAS) handed down financial penalties to the private bank as well, totalling S$13.3m (£7.5m, $9.5m, €8.4m) for breaching money laundering and counter terrorism financing guidelines.
Shortly after, the MAS ordered BSI to shut down its Singapore operations.
International Adviser reported in 2016 that BTG Pactual received regulatory approval to sell BSI to Swiss firm EFG International, and it was renamed into EFG in 2017.
But after acquiring BSI for $1.7bn (CHF1.6bn) from Generali; BTG Pactual sold it for CHF1.bn.