A Zurich-headquartered private bank has been placed into bankruptcy by the Swiss financial watchdog.

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 said it had become aware some time ago that Hottinger, which was founded in 1786, did not meet the minimum capital requirement under regulatory law due to sustained losses and unresolved litigation. The option of restructuring was then reviewed but recapitalisation plans failed to materialise and a suitable investor could not be found to take over the bank.

“As the minimum capital requirements are no longer met and there is no prospect of restructuring, the bank has to be liquidated. There is also the risk of overindebtedness resulting from the costs of the liquidation, which led to the initiation of bankruptcy proceedings,” FINMA said in a statement.

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.

This publication is in contact with the bank about the matter and may update this news item in due course.

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, a spokesperson at FINMA said.