The Swiss Financial Market Supervisory Authority (FINMA) has begun bankruptcy proceedings against Bank Hottinger & Cie, stating that the bank was at risk of becoming “overly indebted”.

FINMA says that it had become aware some time ago that Hottinger (estd 1786) did not meet the minimum capital requirement under regulatory law due to sustained losses and unresolved litigation. The regulator thought about a restructuring but recapitalisation plans failed to materialise and a suitable investor could not be found to take over the bank. There was also the risk of over-indebtedness resulting from the costs of the liquidation; FINMA is saying that this is what led to the initiation of bankruptcy proceedings.

The bankruptcy liquidator will start refunding client assets (privileged deposits) of up to SFr 100,000 ($101,888). As far as deposits over that threshold are concerned, they form part of any general agreement with creditors.
In July 2014, in what may have been an indication of its financial predicament, the bank announced an increase in capital of SFr 7.5 million, approved by FINMA. The bank had been attempting to carry out a second fund-raising and the difficulty in achieving this is what has led to the move to enter the current proceedings, this publication understands.

Hottinger, which has its head office in Zurich and further offices in Geneva, Basel, Sion and Brig and New York, has total assets of SFr 145 million with about 1,500 clients and 50 employees. This is only about the fifth such bankruptcy proceeding concerning such a financial institution since the financial crisis of 2008, according to FINMA.