Banque Havilland Under Scrutiny Amidst Regulatory Concerns

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Banque Havilland: Facing Turbulent Times and Regulatory Scrutiny

According to a report by finews.com, Banque Havilland might be facing a potential revocation of its operating license by the European Central Bank (ECB) and Luxembourg’s financial supervisory authority. The bank’s subsidiaries in Liechtenstein and Switzerland are reportedly experiencing partial operational restrictions, possibly due to officially mandated safeguarding measures.

Investigations and Potential Regulatory Actions

Sources suggest that the ECB’s banking supervision, alongside Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF), may consider closing Banque Havilland’s operations in Luxembourg. This regulatory focus appears to be concentrated on the bank’s Luxembourg headquarters, as per a source familiar with the situation.

History of Regulatory Challenges

Banque Havilland has a history of drawing regulatory attention due to repeated irregularities, as reported by Finews. At the end of 2018, the CSSF imposed a €4 million fine on the bank for inadequate measures against money laundering and poor governance, one of the severest administrative fines the authority can issue. Given this historical burden, it is speculated that the potential license revocation might be linked to what the CSSF views as repeat offenses.

Past Scrutiny and Allegations

The bank has previously been scrutinized by UK regulators and Qatar’s government and allegedly had controversial connections with Britain’s Prince Andrew. Bloomberg also reported on the close ties between the bank’s British billionaire owner, the Rowland family, and Prince Andrew, who purportedly helped in client acquisition.

Financial Performance Amid Regulatory Pressures

According to its Trade and Companies Register (RCS) filings, Banque Havilland, based in Kirchberg, posted €58.2 million in total operating revenue and a €1.1 million profit for the 2023 financial year, compared to €46.4 million in total operating revenue and a €20.3 million net loss for 2022. The bank employed 132 people in Luxembourg and 55 in Liechtenstein, Monaco, and the UK.

Involvement in Controversial Financial Activities

Bloomberg highlighted David Rowland’s active role in client acquisition and credit decisions, noting that he acquired the bank in 2009 from the defunct Icelandic Kaupthing Bank. Furthermore, about a year ago, Banque Havilland’s London branch faced a proposed fine of 10 million pounds by the Financial Conduct Authority (FCA) for allegedly conspiring with investors against Qatar’s currency.

Legal Challenges in Monaco

Recently, two employees of the bank’s Monaco subsidiary were charged with money laundering offenses. Finews.com also reported inconsistencies in the bank’s 2023 annual report, including unexplained changes to the 2022 financial figures.

Concerns Regarding the Liechtenstein Subsidiary

Banque Havilland’s Liechtenstein subsidiary, which includes a Zurich branch, has thus far avoided significant negative attention. However, the potential regulatory actions in Luxembourg raise questions about its future. The Liechtenstein unit, managing approximately 1.6 billion francs in customer funds, currently faces restrictions on activities like customer onboarding and loan approvals.

Regulatory Oversight and Protective Measures

Liechtenstein’s Financial Markets Authority (FMA) and Switzerland’s Financial Market Supervisory Authority (Finma) are closely monitoring the situation. The FMA did not confirm or deny the potential license revocation but stated that Banque Havilland S.A. in Luxembourg is not under its supervision. However, it assured that it maintains ongoing prudential supervision of Banque Havilland (Liechtenstein) AG.

The FMA emphasized its commitment to protecting customer interests and maintaining the stability and reputation of the Liechtenstein financial market through necessary safeguarding measures.

Uncertain Future and Potential Solutions

The feasibility of separating the Liechtenstein subsidiary’s operations from the Luxembourg headquarters remains uncertain. Operating independently as a bank seems challenging, and an emergency sale may be considered, although finding a buyer could prove difficult.

As of Tuesday afternoon, it remains unclear whether any official order for license revocation has been delivered or finalized. Banque Havilland has not yet provided any comments on the matter.

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