Exclusive: FlowBank shareholders consider legal action against forced insolvency

FNG-Exclusive … FNG has learned that the management and shareholders of the Swiss neobank/neobroker FlowBank are planning to take legal action against the Swiss financial regulator FINMA to oppose the forced insolvency and liquidation of the company.

Two weeks ago, FINMA announced that it Revocation of FlowBank’s banking license and led to the de facto closure of the company on the grounds that FlowBank no longer had the minimum capital required to operate the business and there were fears that the bank was over-indebted.

FlowBank’s majority shareholders, led by founder and CEO Charles-Henri Sabet, have apparently retained the services of Thomas Borer, a former Swiss ambassador to Germany who now runs strategic advisory firm Dr. Borer Consulting. (Crypto investment firm CoinShares is also a major backer of FlowBank and has already indicated it will take an impairment charge of more than £21 million to write down its FlowBank investment.) The group plans to “explore all necessary legal options to challenge FINMA’s decision” to protect shareholders’ rights.

The group apparently claims that FINMA’s decision was wrong and that FlowBank has the necessary capital to continue operations and maintain its Swiss banking license.

Even if FlowBank’s shareholders and management were successful in a lawsuit, it would likely not be of any benefit to FlowBank as the company is already in the process of being liquidated by FINMA-appointed Walter Wyss Ltd. All client CFD positions have already been closed and the liquidators are currently working to pay out secured deposits “as soon as possible”.

Meanwhile, FINMA and liquidators report that “fraudulent individuals” are trying to take advantage of the situation by posing as FlowBank SA in liquidation, contacting (now former) FlowBank customers mainly by email, claiming that accounts are now open and transfers are possible again. The regulator and liquidators stressed that any request for payment in return for a refund is fraudulent and should not be followed. They also advise anyone who receives such a message not to click on links or open attachments contained in such emails.

Through Dr. Borer Consulting, the shareholders have issued the following press release (translation of the original statement in French, which is also followed by the English translation below):

Press release – FlowB Holding Switzerland AG

The majority shareholder of FlowBank SA (FlowBank), FlowB Holding Switzerland AG, strongly condemns the decision of the Swiss Financial Markets Supervisory Authority (FINMA) to initiate bankruptcy proceedings against FlowBank.

This decision has no basis in fact. While FINMA claims that FlowBank no longer has the required minimum capital, it fails to mention the fact that the undersigned shareholder has deposited all the funds necessary to meet all applicable requirements in a deposit account opened with a Swiss bank until FINMA approves the corresponding capital increase. Instead of approving the capital increase decided by the bank’s shareholders, FINMA issued a bankruptcy decision based on an alleged lack of capital that in reality did not exist.

FINMA’s decision violates the rights of FlowBank and its shareholders. It causes significant damage. FlowB Holding Switzerland intends to take all necessary steps to ensure that its rights are protected.

Charles-Henri Sabet, member of the Board of Directors of FlowB Holding Switzerland AG, said: “This decision condemns an innovative and growing bank whose business was profitable and which was known and appreciated by thousands of customers and partners in Switzerland and abroad. Our special thoughts go to the bank’s 147 employees, to whom we express our warmest thanks for their tireless efforts, as well as to our 22,000 customers, whom we thank for their trust.”

Press release – FlowB Holding Switzerland AG

With the publication of the supreme court ruling of the Swiss Financial Markets Supervisory Authority (FINMA), the majority shareholder of FlowBank SA (FlowBank), FlowB Holding Switzerland AG, was asked to conduct unsuccessful proceedings to confront FlowBank.

This decision is not based on any factual reasons. While claiming that FlowBank does not have more than the minimum required, FINMA has concealed the fact that the integrity of the required funds, in compliance with all applicable requirements, was deposited by the signatory shareholder in an account held by a Swiss bank, after FINMA had approved the corresponding capital increase. Instead of approving the capital increase decided by the bank’s board of shareholders, FINMA issues a rejection notice based on an alleged lack of equity capital that does not actually exist.

FINMA’s decision represents a violation of the rights of FlowBank and its shareholders. It causes considerable prejudice. FlowB Holding Switzerland declares that it will carry out all necessary procedures to respect its rights.

Charles-Henri Sabet, member of the Board of Directors of FlowB Holding Switzerland AG, stated: “This decision condemns a bank that is developing strongly, whose activities are profitable and appreciated by many customers and partners, both in Switzerland and abroad. We have a special thought for the bank’s 147 employees, but we sincerely thank them for their unceasing commitment, while we thank our 22,000 customers for their trust.”

We will continue to follow the further development of this story.