UPDATE 2-BTG Pactual wants Generali indemnity over BSI's 1MDB link, source says
(Adds Generali statement in paragraph 5, updates share performance)
By Guillermo Parra-Bernal
SAO PAULO May 24 (Reuters) - Grupo BTG Pactual SA is seeking indemnity from Swiss private bank BSI SA's prior owner after losses tied to a Malaysian fund led EFG International AG to cut the price it paid for a controlling stake in BSI, a source familiar with the matter said on Tuesday.
Singapore closed BSI's local branch on Tuesday as part of a probe into 1Malaysia Development Bhd, a Malaysian fund that was a client of the bank. As a result, EFG got permission from Swiss regulators to take over BSI from BTG Pactual at a price below the original 1.33 billion Swiss francs ($1.34 billion) announced in February.
According to the source, who requested anonymity due to the sensitivity of the issue, BTG Pactual will receive less cash from the BSI sale. The Brazilian bank paid insurer Assicurazioni Generali SpA 1.5 billion francs for BSI five months before selling up to 80 percent of BSI to EFG.
São Paulo-based BTG Pactual now wants compensation from Generali in an equal amount to the difference between the new price and the price announced in February, the source added. Problems between BTG Pactual and Generali mounted since BSI's ties with 1MDB, which is thought to have carried out $4 billion in irregular deals in recent years, were unveiled.
Generali "has not received any communication that qualifies as an indemnifiable claim under the agreement," the Trieste, Italy-based insurer said in a statement. "Moreover, as already stated, Generali is protected by several contractual provisions and BTG Pactual has a duty to mitigate any damage."
Investigators in several countries are trying to determine whether related transactions between 1MDB, banks and clients were funneled into the accounts of influential powerbrokers and politicians.
The Monetary Authority of Singapore on Tuesday withdrew BSI's local status as a merchant bank for serious breaches of anti-money laundering rules, the first time in 32 years it has taken such action against a bank. Continuación...