November 1, 2017 / 7:02 AM / a year ago

BTG Pactual has no plans to cash in $300 mln EFG gain -source

ZURICH/SAO PAULO, Nov 1 (Reuters) - Grupo BTG Pactual SA is not considering selling its stake in Swiss private bank EFG International, a source with knowledge of the matter said despite its value rising by more $300 million since it received the shares a year ago.

Zurich-based EFG paid BTG 1.1 billion Swiss francs ($1.1 billion) for BSI Bank last year, 454 million francs of which was in EFG shares.

BTG sold BSI to raise cash and restore investor confidence in the wake of the arrest of its founder André Esteves amid a corruption probe. While this and other asset sales stabilised its liquidity, BTG’s profit shrank to a six-year low in the second quarter of 2017.

However, the BSI deal made the Brazilian bank EFG’s second-biggest shareholder after Greece’s Latsis family, taking a 30 percent stake just a few months after the Swiss bank’s stock hit an all-time low. It has since risen by more than 70 percent, boosting the value of BTG’s holding to 785 million francs.

The BSI deal helped EFG nearly double in size to compete better in Switzerland’s crowded private banking market, which is dominated by UBS and Credit Suisse.

But BSI has been mired in legal problems, chiefly related to transactions linked to the scandal-hit Malaysian sovereign fund 1MDB, which resulted in the closure of its Singapore branch.

EFG’s offices in Como and Milan may also have to shut and its total assets under management fell 4 percent to 138.4 billion francs in the first half of 2017. ($1 = 0.9969 Swiss francs) (Editing by Alexander Smith)

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