(Updates with comments by bank)
ZURICH, Sept 3 Switzerland's financial regulator
said on Wednesday it was investigating Banque Privee Espirito
Santo SA (BPES), a Swiss private bank that is part of the
Espirito Santo family's troubled business empire.
The Lausanne-based bank is owned by Espirito Santo Financial
Group (ESFG), which has been under creditor protection since
late July after it buckled under massive debts linked to its
ESFG was also the biggest shareholder in Banco Espirito
Santo, once Portugal's largest listed bank, which had
to be rescued by the state on Aug. 4 in a 4.9 billion euro
($6.44 billion) bailout.
Swiss regulator FINMA said its investigation would focus on
the role of the Swiss bank, which is undergoing voluntary
liquidation, in distributing securities and financial products
to the wider group.
"The influence of the owners of the bank on procedures in
Switzerland will also be examined," FINMA said in a statement
posted on its website.
BPES said it was collaborating with Swiss authorities in the
investigation, which it expected to continue until January.
"BPES management always acted in a correct and transparent
way, always fulfilling rules and regulations for banking
activity, both in Switzerland and Portugal," it said in a
In early July, the Geneva-based bank became the first
Espirito Santo group entity to acknowledge that its clients had
not been repaid debts issued by Espirito Santo International.
Last month, BPES said it would sell large parts of its
private banking business to rival Swiss bank CBH Compagnie
Bancaire Helvetique SA, after being ordered by FINMA to seek a
buyer for some of its assets.
BPES said it would continue to defend the interests of its
clients exposed to the Espirito Santo Group.
FINMA said it had appointed an independent third party to
find out what happened at BPES. In July, a FINMA board member
stepped down unexpectedly due to a role he held at BPES.
(1 US dollar = 0.7606 euro)
(Reporting By Katharina Bart. Additional reporting by Laura
Noonan in London and Axel Bugge in Lisbon; editing by Jane
Merriman and Tom Pfeiffer)