November 15, 2018 / 12:48 PM / a month ago

Switzerland's EFG Int'l shares drop as new money flows slow

ZURICH, Nov 15 (Reuters) - Swiss private bank EFG International’s shares dropped sharply on Thursday after it struggled to attract new money in recent months, hurt as market volatility dented Asian clients’ risk appetite.

Shares were down more than 6 percent at 1200 GMT, and have slipped more than 40 percent since hitting a two-year high in January.

While EFG International said clients in Switzerland and Italy had contributed to positive underlying net asset inflows from July to Oct. 31, it cited weaker performance in Asia as hurting results.

Year-to-date, the bank’s underlying net new asset growth was at the lower end of its target range of 3 percent to 6 percent, EFG said, down from what it in July had called “solid” underlying net new asset growth of 4.6 percent.

Analysts said that implied significant challenges in attracting new cash.

“Net new money development is disappointing, but we note that expectations on net new money are already very low,” analysts at Citi Bank said in a note to investors.

In the last four months, EFG said assets under management fell to 140.1 billion Swiss francs ($139.1 billion) as of Oct. 31, down from 142.7 billion francs at the end of the first half.

The Zurich-based bank pegged the decline on negative market developments as well as 1.4 billion francs in forced attrition of clients who came with BSI, the troubled Swiss bank that EFG bought from Brazil’s BTG Pactual in early 2016.

That deal nearly doubled EFG’s size but also saddled it with challenges: BSI’s involvement in the scandal-hit Malaysian sovereign fund 1MDB prompted the closure of BSI’s Singapore branch as well as an order from Switzerland’s financial watchdog for it to disgorge tens of millions of dollars in profits.

EFG on Thursday did not give the reasons why it was forcing money from BSI-linked accounts off the bank’s books. ($1 = 1.0074 Swiss francs) (Reporting by John Miller and Angelika Gruber; editing by David Evans)

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