– Finma opens bankruptcy proceedings against FlowBank
The Geneva online bank no longer had sufficient capital to carry out its activity. The risk management of the establishment, probably over-indebted, is singled out by the market supervisor.
Published today at 11:29 a.m.
The Geneva online bank FlowBank had taken up residence in Pont Rouge in the canton of Geneva
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The Federal Financial Market Supervisory Authority FINMA opened bankruptcy proceedings against FlowBank SA on June 13, 2024, the organization informs via the press. This measure was made necessary, writes Finma, “by the fact that the bank no longer has the minimum capital required to carry out its activities. There are also reasons to fear that the bank is overindebted.”
Finma points out that bankruptcy guarantees the protection of depositors. According to current calculations, preferred deposits can be fully repaid from the bank’s available funds. The market monitor indicates that there is “no prospect of consolidation”, the bank having to be liquidated. He appointed the law firm Walder Wyss SA as bankruptcy liquidator to carry out the proceedings.
“Serious violations of surveillance law”
Already in October 2021, FINMA opened a first enforcement procedure against FlowBank AG and subsequently found serious violations of supervisory law, in particular capital requirements as well as requirements relating to adequate organization and risk management. Finma ordered measures in October 2022 and appointed an audit manager to support their implementation.
In June 2023, Finma opened a new enforcement procedure due to various breaches of supervisory law. The investigator then found that FlowBank SA had repeatedly failed to comply with the capital requirements and that its organization continued to present deficiencies in various areas, Finma reports today. Among the problems noted, the bank’s accounting and financial reporting were found to be erroneous and incomplete. The online bank also breached its obligations to provide information and report to the market supervisor.
FINMA ordered by decision the withdrawal of the authorization on March 8, 2024 and denied the bank the guarantee of impeccable activity. Although this decision is pending due to an appeal before the Federal Administrative Court, several interim measures have been ordered by Finma in order to avoid a deterioration of the substance of the bank.
2023 accounts approved in June 2024
Finma notes that the bank’s board of directors only approved the 2023 annual accounts a few days ago, emphasizing that “the reliable figures for assessing the risk of insolvency have only recently become available”. Finma therefore noted that the financial situation of FlowBank “was much worse than what the latter had initially announced”. Etm that there are serious reasons to fear that “the bank will be overindebted at the end of April 2024”.
According to Finma’s current calculations, privileged deposits can be fully covered by the bank’s available funds. Thus, the deposit guarantee of Swiss banks (esisuisse) will probably not have to intervene. Furthermore, client securities deposits are segregated and will be returned, continues the market monitor.
FlowBank is a Geneva bank specializing in online trading launched in 2020 by Charles-Henri Sabet. With its head office in Geneva, it has subsidiaries in London and the Bahamas. The bank has a balance sheet total of around 680 million francs, manages more than 22,000 customer accounts and employs around 140 employees worldwide.
The investigation further showed that the bank entered into numerous business relationships involving increased risks and carried out transactions of considerable volume without adequately clarifying the economic background of the business relationships and transactions. transactions. By entering into such business relationships, the bank significantly increased its risks, even though pre-existing organizational gaps had not yet been filled. According to FINMA’s assessment, the bank seriously breached its anti-money laundering due diligence obligations as well as the authority’s ban on engaging in new commercial activities that could increase the risks.
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Julien de Weck is a journalist and editor-in-chief of Bilan magazine. Having gone through banking and photography, print and the Internet. Stories, today’s challenges and tomorrow’s solutions. More informations
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