ZURICH, July 22 (Reuters) - Swiss lender EFG International saw half-year results dampened by a settlement with Italian tax authorities related to former rival BSI Group’s business.
EFG purchased BSI from Brazil’s BTG Pactual in 2016, a deal complicated by BSI’s legal troubles including links to scandal-hit Malaysian state fund 1Malaysia Development Bhd (1MDB), which resulted in significant client withdrawals.
EFG on Wednesday said it had set aside 9.9 million Swiss francs ($10.6 million) for a settlement with Italian tax authorities over former BSI clients resident in Italy, adding the agreement related to BSI’s activities prior to its purchase by EFG.
Italy’s tax authorities have been looking for information on Swiss banks, encouraged by a 4.5 billion euro ($5.19 billion) tax case against UBS in France and a ruling by Switzerland’s highest court last year paving the way for historical client data to be handed to tax authorities.
EFG said it had reached a civil settlement with Italy’s tax authority in June after the tax watchdog requested information related to the bank’s activities with Italian clients between 2012 and 2017.
It said the matter also involved payments to resolve any criminal charges.
“To the extent this settlement relates to BSI, which did more business with Italian resident clients than the other Group entities, the seller of BSI has accepted responsibility to reimburse amounts related to BSI’s former Italian business,” it said, adding the matter was likely to be resolved within a year.
Results overall included liabilities of 26.4 million Swiss francs in amounts payable to Italian tax authorities related to BSI Group.
The wealth manager said net profit rose more than 10% in the half-year to 34.8 million francs, with the bank bringing in 4.2 billion francs in net new assets during the period.
($1 = 0.9324 Swiss francs)
$1 = 0.8677 euros Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields