FlowBank Seeks London Capital Group Buyer, Shuts Bahamas Operations
Walder Wyss SA, the liquidator of bankrupt FlowBank Ltd., has published its first creditors’ circular outlining the steps it has taken since Swiss regulators declared the bank insolvent.
As of 30 March 2024, the liquidator held over CHF 390 million in assets, including shares in London Capital Group Limited (UK) and LCG Capital Markets Ltd (Bahamas). The liquidator intends to wind down operations in the Bahamas while seeking a buyer for the UK business.
The liquidator also responded that claims made by FlowBank CEO Charles Henri Sabet in relation to certain works of art located on FlowBank’s premises were considered legitimate under Swiss law.
In the event of bankruptcy, FlowBank’s IT platform, payment and communication systems were blocked, and all transactions were canceled pending liquidator approval. Measures included closing CFD positions and converting foreign currency deposits into Swiss francs.
From May 25, customers will have read-only access to their accounts via FlowBank’s e-banking platform, allowing them to check their balances and deposit status.
The liquidator has also initiated a procedure under Swiss Banking Law, which allows customers to request the repayment of collateral deposits of up to CHF 100,000. As of 23 March, approximately CHF 45 million has been repaid to 5,800 accounts, with approximately 2,900 customers still having not claimed their collateral deposits.
The clearing house also reported that it has transferred approximately $900 million in financial instruments since 15/20/2024, although manual processing may result in some delays. The statement said efforts are underway to speed up the securities transfer process.
In early July, LCG Capital Markets Limited (trading as “FlowBroker”) ceased operations as a result of insolvency proceedings against its parent company. FlowBank SA, launched by the Swiss Financial Market Supervisory Authority (FINMA) on 13 July 2024.
FINMA’s action stems from FlowBank’s failure to meet capital requirements, maintain organizational adequacy, and comply with disclosure and reporting obligations.
The collapse of Flowbank SA is due to a series of regulatory violations. FINMA first intervened in September 2021, citing serious violations of supervisory law, particularly with regard to capital requirements and risk management.
Subsequent actions included the appointment of an independent auditor and monitor to oversee the bank’s activities. Despite these efforts, FlowBank continued to breach regulatory standards, including high-risk business relationships and inadequate financial reporting.
FlowBank, founded in 2020 by former LCG CEO Charles-Henri Savet, provides services such as cryptocurrency trading and maintains close ties with cryptocurrency asset management company CoinShares. However, FINMA found excessive debt and regulatory violations, leading to its downfall.
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